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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic Electric $ 101,800 $ 83,300 45,575 46,750 56,225 36,550 4,985 4,320 10,110 8,580 19,700 17,700 1,930 1,790 7,095 5,970 2,945 2,600 46,765 40,960 $ 9,460 $ (4,410) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Acoustic Electric Combined Gross profit Direct expenses Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 Required 1 Required 2 >
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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic Electric $ 101,800 $ 83,300 45,575 46,750 56,225 36,550 4,985 4,320 10,110 8,580 19,700 17,700 1,930 1,790 7,095 5,970 2,945 2,600 46,765 40,960 $ 9,460 $ (4,410) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Acoustic Electric Combined Gross profit Direct expenses Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly
Transcribed Image Text: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
Sales
Cost of goods sold
Gross profit
Expenses
Advertising
Depreciation-Equipment
Salaries
Supplies used
Rent
Utilities
Total expenses
Income (loss)
Acoustic
Electric
$ 101,800
$ 83,300
45,575
46,750
56,225
36,550
4,985
4,320
10,110
8,580
19,700
17,700
1,930
1,790
7,095
5,970
2,945
2,600
46,765
40,960
$ 9,460 $ (4,410)
1. Prepare a departmental contribution to overhead report.
2. Based on contribution to overhead, should the electric guitar department be eliminated?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a departmental contribution to overhead report.
Departmental Contribution to Overhead
For Year Ended December 31
Acoustic
Electric
Combined
Gross profit
Direct expenses
Total direct expenses
0
0
0
Departmental contribution to overhead
$
0 $
0 $
0
Required 1
Required 2 >
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