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Exercise 24-7 (Algo) Departmental contribution to overhead LO P3 Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and
Exercise 24-7 (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 Acoustic Electric Sales $ 102,300 $ 84,300 Cost of goods sold 44,075 47,350 Gross profit 58,225 36,950 Expenses Advertising 5,045 4,250 Depreciation-Equipment 10,060 8,510 Salaries 19,800 17,900 Supplies used 2,020 1,800 Rent 7,055 5,960 Utilities 2,965 2,620 Total expenses 46,945 41,040 Income (loss) $ 11,280 $ (4,090) 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 Prepare a departmental contribution to overhead report.
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