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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic Electric $ 101,800 $ 83,300 45,575 46,750 56,225 36,550 4,985 4,320 10,110 8,580 19,700 17,700 1,930 1,790 7,095 5,970 2,945 2,600 46,765 40,960 $ 9,460 $ (4,410) 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. Departmental Contribution to Overhead For Year Ended December 31 Acoustic Electric Combined Gross profit Direct expenses Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 Required 1 Required 2 >
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 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic Electric $ 101,800 $ 83,300 45,575 46,750 56,225 36,550 4,985 4,320 10,110 8,580 19,700 17,700 1,930 1,790 7,095 5,970 2,945 2,600 46,765 40,960 $ 9,460 $ (4,410) 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. Departmental Contribution to Overhead For Year Ended December 31 Acoustic Electric Combined Gross profit Direct expenses Total direct expenses 0 0 0 Departmental contribution to overhead $ 0 $ 0 $ 0 Required 1 Required 2 >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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