Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities...
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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 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses $ 103,100 45,575 Electric $ 83,800 47,550 57,525 36,250 5,035 4,330 10,050 8,580 19,900 17,700 1,950 1,750 7,005 5,990 2,975 2,590 46,915 40,940 Income (loss) $ 10,610 $ (4,690) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? 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 Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses $ 103,100 45,575 Electric $ 83,800 47,550 57,525 36,250 5,035 4,330 10,050 8,580 19,900 17,700 1,950 1,750 7,005 5,990 2,975 2,590 46,915 40,940 Income (loss) $ 10,610 $ (4,690) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated?
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