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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 $ 103,500 45,075 58,425 5,075 10,130 Electric $ 84,700 47,350 37,350 4,280 8,530 19,500 17,900 2,010 1,790 7,045 6,000 2,975 2,560 46,735 41,060 $ 11,690 $ (3,710) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?

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 $ 103,500 45,075 58,425 5,075 10,130 Electric $ 84,700 47,350 37,350 4,280 8,530 19,500 17,900 2,010 1,790 7,045 6,000 2,975 2,560 46,735 41,060 $ 11,690 $ (3,710) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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) Required 1 Required 2 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Acoustic $ 103,500 45,075 58,425 Complete this question by entering your answers in the tabs below. For Year Ended December 31 Direct expenses Prepare a departmental contribution to overhead report. 5,075 10,130 19,500 4,280 8,530 17,900 2,010 1,790 7,045 6,000 2,975 2,560 46,735 41,060 $ 11,690 $ (3,710) Total direct expenses Departmental contribution to overhead $ Departmental Contribution to Overhead Electric $ 84,700 47,350 37,350 Acoustic 0 0 $ < Required 1 Electric 0 0 Combined $ Required 2 0 0 > 11
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) Required 1 Required 2 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Acoustic $ 103,500 45,075 58,425 Complete this question by entering your answers in the tabs below. For Year Ended December 31 Direct expenses Prepare a departmental contribution to overhead report. 5,075 10,130 19,500 4,280 8,530 17,900 2,010 1,790 7,045 6,000 2,975 2,560 46,735 41,060 $ 11,690 $ (3,710) Total direct expenses Departmental contribution to overhead $ Departmental Contribution to Overhead Electric $ 84,700 47,350 37,350 Acoustic 0 0 $ < Required 1 Electric 0 0 Combined $ Required 2 0 0 > 11
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