Exercise 22-7 (Algo) Departmental contribution to overhead LO P3 Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Departmental Income Statements Acoustic $ 102,400 45,275 Electric $ 83,900 46,950 57,125 36,950 5,015 4,330 10,050 8,560 19,500 17,300 2,010 1,780 7,025 6,010 3,035 2,580 46,635 40,560 Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) $ 10,490 $ (3,610) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined < Required 1 Required 2 > Exercise 22-7 (Algo) Departmental contribution to overhead LO P3 Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic Electric $ 83,900 46,950 $ 102,400 45,275 57,125 36,950 5,015 4,330 10,050 8,560 19,500 17,300 2,010 1,780 7,025 6,010 3,035 46,635 2,580 40,560 $ 10,490 $ (3,610) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Based on contribution to overhead, should the electric guitar department be eliminated? Based on contribution to overhead, should the electric guitar department be eliminated? < Required 1 Required 2 >