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 Statenents For Year Ended December 31, 2019 Acoustic Electric Sales $103, 10e 584,100 Cost of goods sold 44,675 42,550 Gross profit 58,425 36,550 Operating expenses Advertising expense 5,025 4,320 Depreciation expense-Equipment 10,070 8,510 Salaries expense 19,900 17,100 Supplies expense 1,980 1,760 Rent expense 7,055 6,040 Utilities expense 3,005 2,56 Total operating expenses 47,035 40,290 Net income (loss) $ 11,390 $(3,740) 1. Prepare a departmental contribution report that shows each department's contribution to overhead, 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 report that shows each department's contribution to overhead. Required 1 Required 2 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, 2019 Acoustic Dept. Electric Dept. Combined Direct expenses 0 0 0 Total direct expenses Departmental contributions to overhead Indirect expenses $ 0 0 $ 0 Total Indirect expenses 0 $ 0 Required Required 2 > 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, 2019 Acoustic Electric Sales $103, 100 $84,100 Cost of goods sold 44.675 47,550 Gross profit 58,425 36,550 Operating expenses Advertising expense 5,025 4,320 Depreciation expense-Equipment 10,070 8.510 Salaries expense 19,900 17.100 Supplies expense 1.989 1,760 Rent expense 7.055 6,048 Utilities expense 3,005 2,560 Total operating expenses 47,035 40,290 Net Income (105) $ 11,390 $(3,748) 1. Prepare a departmental contribution report that shows each department's contribution to overhead. 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?
