70.2K

Verified Solution

Link Copied!

Question #2

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. Electric $83,200 47,750 35,450 WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2017 Acoustic Sales $102,900 Cost of goods sold 45,175 Gross profit 57,725 Operating expenses Advertising expense 5,065 Depreciation expense-equipment 10,150 Salaries expense 19,600 Supplies expense 1,970 Rent expense 7,015 Utilities expense 3,045 Total operating expenses 46,845 Net income (loss) $ 10,880 4,300 8,510 17,300 1,740 6,020 2,590 40,460 $(5,010) 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 0 0 0 Total direct expenses Departmental contributions to overhead Indirect expenses $ 0 $ 0 $ 0 Total indirect expenses 0 $ 0 Zisk Co. purchases raw materials on account. Budgeted purchase amounts are: April, $84,000; May, $114,000; and June, $124,000. Payments are made as follows: 75% in the month of purchase and 25% in the month after purchase. The March 31 balance of accounts payable is $26,000. Prepare a schedule of budgeted cash payments for April, May, and June. April May June Current month purchases 75% Ending accounts payable 25% Total purchases $ 0 $ 0 $ 0 Zisk Co. Schedule of Cash Payments For April, May, and June April May June Cash payments for: Current month purchases Prior month purchases Budgeted cash payments for materials

Answer & Explanation Solved by verified expert

See Answer