A guitar manufacturer is considering eliminating its electric guitar division because its $90,790 expenses are higher than its $84,030 sales. The company reports the following expenses for this division. Avoidable Expenses Unavoidable Expenses Cost of goods sold $ 63,000 Direct expenses 9,250 $ 2,950 Indirect expenses 1,010 2,150 Service department costs 10,400 2,030 Should the division be eliminated? (Any loss amount should be indicated with minus sign.)
A guitar manufacturer is considering eliminating its electric guitar division because its $90,790 expenses are higher than its $84,030 sales. The company reports the following expenses for this division. Avoidable Expenses Unavoidable Expenses Cost of goods sold $ 63,000 Direct expenses 9,250 $ 2,950 Indirect expenses 1,010 2,150 Service department costs 10,400 2,030 Should the division be eliminated? (Any loss amount should be indicated with minus sign.)
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 $90,790 expenses are higher than its $84,030 sales. The company reports the following expenses for this division.
| Avoidable Expenses |
Unavoidable Expenses |
||||||
| Cost of goods sold | $ | 63,000 | |||||
| Direct expenses | 9,250 | $ | 2,950 | ||||
| Indirect expenses | 1,010 | 2,150 | |||||
| Service department costs | 10,400 | 2,030 | |||||
Should the division be eliminated? (Any loss amount should be indicated with minus sign.)
Transcribed Image Text:Electric Guitar Division is:
Кept
Eliminated
Sales
Expenses:
Total expenses
Net income (loss)
Revenues from electric guitar division
Avoidable expenses
Revenues are greater than (less than)
avoidable expenses by
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