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. For Year Ended December 31 Departmental Income Statements Sales. Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 101,700 45,575 56,125 5,015 10,060 19,800 2,000 7,045 2,975 46,895 $9,230 Electric $ 84,400 46,750 37,650 4,280 8,560 17,500 1,760 6,030 2,630 40,760 $ (3,110) 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 indirec expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. For Year Ended December 31 Departmental Income Statements Sales. Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 101,700 45,575 56,125 5,015 10,060 19,800 2,000 7,045 2,975 46,895 $9,230 Electric $ 84,400 46,750 37,650 4,280 8,560 17,500 1,760 6,030 2,630 40,760 $ (3,110) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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