Exercise 24-7 Departmental contribution to overhead 23 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.... $112,500 $105,500 Cost of goods sold 55,675 66,750 Gross profit 56,825 38,750 Expenses Advertising. 8,075 6,250 Depreciation-Equipment. 10,150 9,000 Seleries... 17,300 13,500 Supplies used. 2,030 1,700 Rent... 6,105 5,950 Usities 3,045 2,550 Total expenses 46,705 38.950 Income (loss) $10,120 $ (200) 1. Prepare a departmental contribution to overhead report (see Exhibit 24.12). 2. Based on contribution to overhead, should the Electric Guitar department be eliminated?