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 4 Utilities Total expenses Income (loss) Acoustic $ 103,400 44,675 58,725 4,995 10,150 Required 1 Required 2 19,700 1,930 7,055 2,995 46,825 $ 11,900 Electric $ 84,400 47,450 36,950 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? 4,260 8,580 17,600 1,780 5,980 2,560 40,760 $ (3,810) Complete this question by entering your answers in the tabs below. vut
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 4 Utilities Total expenses Income (loss) Acoustic $ 103,400 44,675 58,725 4,995 10,150 Required 1 Required 2 19,700 1,930 7,055 2,995 46,825 $ 11,900 Electric $ 84,400 47,450 36,950 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? 4,260 8,580 17,600 1,780 5,980 2,560 40,760 $ (3,810) Complete this question by entering your answers in the tabs below. vut
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
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
$ 103,400
44,675
58,725
For Year Ended December 31
4,995
10,150
19,700
Gross profit
Direct expenses
1,930
7,055
2,995
46,825
$ 11,900
Required 1 Required 2
Prepare a departmental contribution to overhead report.
Departmental Contribution to Overhead
Total direct expenses
Departmental contribution to overhead
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.
Electric
$ 84,400
47,450
36,950
Acoustic
< Required 1
4,260
8,580
17,600
1,780
5,980
2,560
40,760
$ (3,810)
Electric
Combined
Required 2 >
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