Business, 14.04.2020 21:23 kaliyaht01

Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating 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, 2019 Acoustic Electric Sales $ 103,100 $ 84,900 Cost of goods sold 44,075 46,950 Gross profit 59,025 37,950 Operating expenses Advertising expense 4,985 4,330 Depreciation expense—Equipment 10,130 8,530 Salaries expense 19,300 17,700 Supplies expense 2,020 1,760 Rent expense 7,065 6,040 Utilities expense 2,995 2,650 Total operating expenses 46,495 41,010 Net income (loss) $ 12,530 $ (3,060 ) 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 be eliminated?

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Below are departmental income statements for a guitar manufacturer. The manufacturer is considering...