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A guitar manufacturer is considering eliminating its electric guitar division because its $85,730 expenses are higher than its $78,420 sales. The company reports the following expenses for this division. Avoidable Unavoidable

A guitar manufacturer is considering eliminating its electric guitar division because its $85,730 expenses are higher than its $78,420 sales. The company reports the following expenses for this division. Avoidable Unavoidable

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A guitar manufacturer is considering eliminating its electric guitar division because its $85,730 expenses are higher than its $78,420 sales. The company reports the following expenses for this division. Cost of goods sold Direct expenses Indirect expenses Service department costs Electric Guitar Division is: Sales Expenses: Avoidable Expenses $ 59,000 10,150 Total expenses Net income (loss) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) avoidable expenses by 800 8,200 Should the division be eliminated? (Any loss amount should be Indicated with minus sign.) Unavoidable Expenses Kept $ 2,550 2,500 2,530 Eliminated
Transcribed Image Text:A guitar manufacturer is considering eliminating its electric guitar division because its $85,730 expenses are higher than its $78,420 sales. The company reports the following expenses for this division. Cost of goods sold Direct expenses Indirect expenses Service department costs Electric Guitar Division is: Sales Expenses: Avoidable Expenses $ 59,000 10,150 Total expenses Net income (loss) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) avoidable expenses by 800 8,200 Should the division be eliminated? (Any loss amount should be Indicated with minus sign.) Unavoidable Expenses Kept $ 2,550 2,500 2,530 Eliminated
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