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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. WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2015 Electric Sales $ 112 500 $105.500 Cost of goods sold 55 675 66.750 Gross profit 56 825 38.750 Operating expenses Advertising expense BOTS 5.250 Depreciation expense equipment 10.150 9.000 17300 13.500 Salaries expense Supplies expense 2030 1,700 Rent expense 2.550 Utilities expense 6.105 5.950 Total operating expenses 46.705 38,950 Net Income (loss) $ 10.120 $ (200) 1. Prepare a departmental contribution report that shows each department's contribution to overhead. WHOLESALE GUITARS Income Statement Showing Departmental Contribution to Overhead For Year Ended December 31, 2015 Acoustic Dept Electric Dept. Combined Direct expenses Total direct expenses Departmental contributions to Indirect expenses Total indirect expenses 2. Based on contribution to overhead, should the electric guitar department be eliminated? Yes No