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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 Sales $ 103,300 Electric $ 83,300 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 45,275 47,450 58,025 35,850 4,995 4,300 10,120 8,580 20,100 17,900 1,950 1,730 7,085 6,000 3,005 2,570 47,255 41,080 Income (loss) $ 10,770 $ (5,230) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined < Required 1 Required 2 >

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 Sales $ 103,300 Electric $ 83,300 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 45,275 47,450 58,025 35,850 4,995 4,300 10,120 8,580 20,100 17,900 1,950 1,730 7,085 6,000 3,005 2,570 47,255 41,080 Income (loss) $ 10,770 $ (5,230) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined < Required 1 Required 2 >

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 Acoustic Sales $ 103,300 Electric $ 83,300 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 45,275 47,450 58,025 35,850 4,995 4,300 10,120 8,580 20,100 17,900 1,950 1,730 7,085 6,000 3,005 2,570 47,255 41,080 Income (loss) $ 10,770 $ (5,230) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?
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 Sales $ 103,300 Electric $ 83,300 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses 45,275 47,450 58,025 35,850 4,995 4,300 10,120 8,580 20,100 17,900 1,950 1,730 7,085 6,000 3,005 2,570 47,255 41,080 Income (loss) $ 10,770 $ (5,230) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?
Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined < Required 1 Required 2 >
Transcribed Image Text:Required 1 Required 2 Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead For Year Ended December 31 Gross profit Direct expenses Total direct expenses Departmental contribution to overhead Acoustic Electric Combined < Required 1 Required 2 >
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