Question: Needing help woth this problem. A guitar manufacturer is considering eliminating its electric guitar division because its $92,000 expenses are higher than its $84,950 sales.
A guitar manufacturer is considering eliminating its electric guitar division because its $92,000 expenses are higher than its $84,950 sales. The company reports the following expenses for this division Unavoidable Expenses Coat of goods sold Direct expenses Indirect expenses Service department costs Avoidable Expenses $ 64,000 10,050 770 9,800 $2,750 1,700 2,930 Should the division be eliminated? 2750 Answer is complete but not entirely correct. Electric Guitar Division is: Kept Eliminated 84,950s 00 Sales Expenses 64.000 Cost of goods sold 10.050 Direct expenses 770 Indirect expenses 9.800 Service department costs 7.380 84 620 Total expenses Net income (los) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) avoidable expenses by
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