Exercise 24-7 Departmental contribution to overhead 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 Salarios 17.300 13,500 Supplies used 2,030 1.700 Rent 6,105 5,950 Utatio 3,045 2.550 46,705 38.950 $10,120 $ (200) Total expenses Income (loss) 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