$7$

Exercise $22-7($Algo$)$ Departmental contribution to overhead LO P$3$

$4\mathrm{.}34$

points

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.

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|\}$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$c$|\}\{$Departmental Income Statements$\}\backslash \backslash$

$\backslash$hline For Year Ended December $31$ & Acoustic & Electric $\backslash \backslash$

$\backslash$hline Sales & $\backslash$$ $102,000$ & $\backslash$$ $83,600\backslash \backslash$

$\backslash$hline Cost of goods sold & $45,575$ & $47,750\backslash \backslash$

$\backslash$hline Gross profit & $56,425$ & $35,850\backslash \backslash$

$\backslash$hline $\backslash$multicolumn$\{3\}\{|$l$|\}\{$Expenses$\}\backslash \backslash$

$\backslash$hline Advertising & $5,005$ & $4,350\backslash \backslash$

$\backslash$hline Depreciation$-$Equipment & $10,120$ & $8,570\backslash \backslash$

$\backslash$hline Salaries & $19,800$ & $17,500\backslash \backslash$

$\backslash$hline Supplies used & $2,010$ & $1,770\backslash \backslash$

$\backslash$hline Rent & $7,025$ & $6,030\backslash \backslash$

$\backslash$hline Utilities & $2,965$ & $2,640\backslash \backslash$

$\backslash$hline Total expenses & $46,925$ & $40,860\backslash \backslash$

$\backslash$hline Income $($loss$)$ & $\backslash$$ $9,500$ & $\backslash$$ $(5,010)\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

$1.$ 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.

Required $1$

Required $2$

Prepare a departmental contribution to overhead report.

$\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|$l$|\}$

$\backslash$hline $\backslash$multicolumn$\{4\}\{|$c$|\}\{$Departmental Contribution to Overhead$\}\backslash \backslash$

$\backslash$hline For Year Ended December $31$ & Acoustic & Electric & Combined $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline Gross profit & & & $\backslash \backslash$

$\backslash$hline Direct expenses & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline & & & $\backslash \backslash$

$\backslash$hline Total direct expenses & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Mc

Graw

Prey

$7$ of $23$

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