Exercise 24-7 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 $102,400 $83,700 cost of goods sold 43.875 47,150 Gross profit 58,525 36,550 Operating expenses Advertising expense 4,985 4,270 Depreciation expense-equipment 10,060 8,560 Salaries expense 19,800 17,100 Supplies expense 1,970 1,800 Rent expensie 7,035 6,020 Utilities expense 2,955 2,580 Total operating expenses 46,805 40,330 Het Income (los) $ 11,720 $ (3,780) 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? No