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

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Accounting

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 $ 102,100 $ 84,500 Cost of goods sold 45,475 47,050 Gross profit 56,625 37,450 Operating expenses Advertising expense 5,045 4,300 Depreciation expenseEquipment 10,090 8,600 Salaries expense 19,400 17,100 Supplies expense 1,940 1,780 Rent expense 7,075 5,960 Utilities expense 3,045 2,600 Total operating expenses 46,595 40,340 Net income (loss) $ 10,030 $ (2,890 ) 1. Prepare a departmental contribution report that shows each departments contribution to overhead. 2. Based on contribution to overhead, should the electric guitar department be eliminated?

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