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 $ 102,000 43,675 58,325 5,025 10,130 19,700 Required 1 Required 2 Electric $ 83,200 47,250 35,950 4,270 8,520 17,500 2,010 1,790 7,005 6,020 2,995 2,610 46,865 40,710 $ 11,460 $ (4,760) 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 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 $ 102,000 43,675 58,325 5,025 10,130 19,700 Required 1 Required 2 Electric $ 83,200 47,250 35,950 4,270 8,520 17,500 2,010 1,790 7,005 6,020 2,995 2,610 46,865 40,710 $ 11,460 $ (4,760) 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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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