Question

Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect.


(1) Prepare a departmental contribution report that shows each department’s contribution to overhead.
(2) Based on contribution to overhead, should the electric guitar department beeliminated?


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  • CreatedNovember 29, 2013
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