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Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guita department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Advertising expense Depreciation expense-equipment Salaries expense Supplies expense Rent expense Utilities expense Total operating expenses Net income (loss) Acoustic $102,200 45,475 56,725 5,025 10,100 19,900 1,940 7,035 2,975 46,975 $ 9,750 Electric $84,300 46,850 37,450 4,260 8,560 17,300 1,710 5,980 2,630 40,440 $(2,990)

Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guita department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Advertising expense Depreciation expense-equipment Salaries expense Supplies expense Rent expense Utilities expense Total operating expenses Net income (loss) Acoustic $102,200 45,475 56,725 5,025 10,100 19,900 1,940 7,035 2,975 46,975 $ 9,750 Electric $84,300 46,850 37,450 4,260 8,560 17,300 1,710 5,980 2,630 40,440 $(2,990)

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 manufacturer is considering eliminating its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Advertising expense Depreciation expense-equipment Salaries expense Supplies expense Rent expense Utilities expense Total operating expenses Net income (loss) Acoustic $102,200 45,475 56,725 5,025 10,100 19,900 1,940 7,035 2,975 46,975 $ 9,750 Electric $84,300 46,850 37,450 4,260 8,560 17,300 1,710 5,980 2,630 40,440 $ (2,990)
Transcribed Image Text:Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses Advertising expense Depreciation expense-equipment Salaries expense Supplies expense Rent expense Utilities expense Total operating expenses Net income (loss) Acoustic $102,200 45,475 56,725 5,025 10,100 19,900 1,940 7,035 2,975 46,975 $ 9,750 Electric $84,300 46,850 37,450 4,260 8,560 17,300 1,710 5,980 2,630 40,440 $ (2,990)
3. 1. Prepare a departmental contribution report that shows each department's contribution to overhead. Income Statement Showing Departmental Contribution to Overhead For Year Ended December 31, 2017 Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses WHOLESALE GUITARS O No O Yes 2. Based on contribution to overhead, should the electric guitar department be eliminated? Acoustic Dept. Electric Dept. Combined Apple Inc. reports the following for three of its geographic segments for a recent year. (Smillions) Americas Europe China Operating income $ 24,917 $17,625 $ 9,841 Sales 66,339 41,883 34,417 Americas Europe China Compute profit margin for each division. (Round your answers to 1 decimal place.) Profit Margin % % %
Transcribed Image Text:3. 1. Prepare a departmental contribution report that shows each department's contribution to overhead. Income Statement Showing Departmental Contribution to Overhead For Year Ended December 31, 2017 Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses WHOLESALE GUITARS O No O Yes 2. Based on contribution to overhead, should the electric guitar department be eliminated? Acoustic Dept. Electric Dept. Combined Apple Inc. reports the following for three of its geographic segments for a recent year. (Smillions) Americas Europe China Operating income $ 24,917 $17,625 $ 9,841 Sales 66,339 41,883 34,417 Americas Europe China Compute profit margin for each division. (Round your answers to 1 decimal place.) Profit Margin % % %
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