Below are departmental income statements for a guitar manufacturer. The manufacturer is considering eliminating its...
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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, 2017 Acoustic $102,500 Electric $83,100 Sales Cost of goods sold Gross profit Operating expenses Advertising expense Depreciation expense-equipment Salaries expense Supplies expense 45,075 57,425 47,050 36,050 4,300 8,520 17,300 1,740 5,950 2,620 40,430 $(4,380) 4,995 10,130 20,200 1,930 7,095 Rent expense Utilities expense Total operating expenses 2,985 47,335 Net income (loss) 10,090 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, 2017 Acoustic Dept. Electric Dept. Combined Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses
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