A company classifies its rent, advertising, and utilities as indirect expenses. The company is considering eliminating its Guitars department because it shows a loss as follows. Departmental Income Statements For Year Ended December 31 Drums Sales Cost of goods sold Gross profit Expenses Rent Depreciation-Machinery Supervisory salaries Advertising Supplies used Utilities For Year Ended December 31 Gross profit Direct expenses $ 257,000 127,350 129,650 13,810 21,900 36,200 17,750 5,660 7,690 103,010 $ 26,640 Total direct expenses Departmental contribution to overhead Guitars $ 227,000 141,500 85,500 Total expenses Income (loss) Prepare a departmental contribution to overhead report. 13,500 19,600 28,600 14,100 5,000 6,700 87.500 $ (2,000) Departmental Contribution to Overhead Drums Guitars Combined
A company classifies its rent, advertising, and utilities as indirect expenses. The company is considering eliminating its Guitars department because it shows a loss as follows. Departmental Income Statements For Year Ended December 31 Drums Sales Cost of goods sold Gross profit Expenses Rent Depreciation-Machinery Supervisory salaries Advertising Supplies used Utilities For Year Ended December 31 Gross profit Direct expenses $ 257,000 127,350 129,650 13,810 21,900 36,200 17,750 5,660 7,690 103,010 $ 26,640 Total direct expenses Departmental contribution to overhead Guitars $ 227,000 141,500 85,500 Total expenses Income (loss) Prepare a departmental contribution to overhead report. 13,500 19,600 28,600 14,100 5,000 6,700 87.500 $ (2,000) Departmental Contribution to Overhead Drums Guitars Combined
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:A company classifies its rent, advertising, and utilities as indirect expenses. The company is considering eliminating its Guitars
department because it shows a loss as follows.
Departmental Income Statements
For Year Ended December 31
Drums
Sales
Cost of goods sold
Gross profit
Expenses
Rent
Depreciation-Machinery
Supervisory salaries
Advertising
Supplies used
Utilities
For Year Ended December 31
Gross profit
Direct expenses
$ 257,000
127,350
129,650
Guitars
$ 227,000
141,500
85,500
Total direct expenses
Departmental contribution to overhead
13,810
21,900
36,200
17,750
5,660
5,000
7,690
6,700
103,010
87,500
$ 26,640 $ (2,000)
Total expenses
Income (loss)
Prepare a departmental contribution to overhead report.
13,500
19,600
28,600
14,100
Departmental Contribution to Overhead
Drums
Guitars
Combined
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