Exercise 22-7 Departmental contribution report LO P3 Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitan 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 us Sales Cost of goods sold 46,950 37,150 44,975 57,725 Gross profit Operating expenses Advertising expense 4,975 4,320 pense-equipment Salaries exnense Supplies expense Rent expense Utilities expense Total operating expenses 17,100 1,950 1,710 5,960 2,650 7,055 3,015 40,280 47,075 Net income (loss) 1,650 (3,130) 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 Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses 2. Based on contribution to overhead, should the electric guitar department be eliminated? O No Yes