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Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirec 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 $ 102,400 43,775 58,625 5,035 10,090 Electric $ 84,700 47,650 37,050 4,320 8,500 17,700 19,700 1,960 7,065 3,045 46,895 $ 11,730 $ (3,920) 1,780 6,020 2,650 40,970 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.

Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirec 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 $ 102,400 43,775 58,625 5,035 10,090 Electric $ 84,700 47,650 37,050 4,320 8,500 17,700 19,700 1,960 7,065 3,045 46,895 $ 11,730 $ (3,920) 1,780 6,020 2,650 40,970 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.

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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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 $ 102,400 43,775 58,625 Required 1 Required 2 5,035 10,090 19,700 1,960 7,065 3,045 46,895 $ 11,730 For Year Ended December 31 Electric $ 84,700 47,650 37,050 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. 4,320 8,500 17,700 1,780 6,020 2,650 40,970 $ (3,920) Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Acoustic Electric Combined
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 $ 102,400 43,775 58,625 Required 1 Required 2 5,035 10,090 19,700 1,960 7,065 3,045 46,895 $ 11,730 For Year Ended December 31 Electric $ 84,700 47,650 37,050 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. 4,320 8,500 17,700 1,780 6,020 2,650 40,970 $ (3,920) Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Acoustic Electric Combined
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