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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. 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?

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 Acoustic $ 101,700 Sales Cost of goods sold 45,575 Gross profit 56,125 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? 5,015 10,060 19,800 2,000 7,045 2,975 46,895 $ 9,230 Complete this question by entering your answers in the tabs below. For Year Ended December 31 Gross profit Direct expenses Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Total direct expenses Departmental contribution to overhead Electric $ 84,400 46,750 37,650 4,280 8,560 17,500 1,760 6,030 2,630 40,760 $ (3,110) Acoustic < Required 1 Electric Combined Required 2 >
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 Acoustic $ 101,700 Sales Cost of goods sold 45,575 Gross profit 56,125 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? 5,015 10,060 19,800 2,000 7,045 2,975 46,895 $ 9,230 Complete this question by entering your answers in the tabs below. For Year Ended December 31 Gross profit Direct expenses Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Total direct expenses Departmental contribution to overhead Electric $ 84,400 46,750 37,650 4,280 8,560 17,500 1,760 6,030 2,630 40,760 $ (3,110) Acoustic < Required 1 Electric Combined Required 2 >
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