Exercise 22-7 Departmental contribution report LO P3 Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Acoustic Electric Sales $ 103,500 $83,400 Cost of goods sold 44,475 47, 450 Gross profit 59,025 35,950 Operating expenses Advertising expense 4,9854 ,290 Depreciation expense-equipment 10,0608 ,590 Salaries expense 20, 300 17,900 Supplies expense 1,960 1,720 Rent expense 7,085 5,970 Utilities expense 2,995 2,550 Total operating expenses 47,385 41,020 Net income (loss) $ 11,640 $ (5,070) 1. Prepare a departmental contribution report that shows each department's contribution to overhead. WHOLESALE GUITARS Income Statement Showing Departmental Contribution to Overhead For Year Ended December 31, 2017 Acoustic Dept. Electric Dept. Combined Direct expenses 000 Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses 0 2. Based on contribution to overhead, should the electric guitar department be eliminated? O No Yes