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. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Departmental Income Statements Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Required 1 Required 2 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? For Year Ended December 31 Direct expenses Acoustic $ 102,200 45,375 56,825 Complete this question by entering your answers in the tabs below. Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Total direct expenses Departmental contribution to overhead 5,065 10,070 19,700 1,950 7,015 2,965 46,765 $ 10,060 $ (4,370) $ Acoustic Electric $ 83,700 47,250 36,450 4,290 8,500 17,700 1,710 6,010 2,610 40,820 0 0 $ < Required 1 Electric Combined 0 0 $ 0 0 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. For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Departmental Income Statements Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Required 1 Required 2 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? For Year Ended December 31 Direct expenses Acoustic $ 102,200 45,375 56,825 Complete this question by entering your answers in the tabs below. Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead Total direct expenses Departmental contribution to overhead 5,065 10,070 19,700 1,950 7,015 2,965 46,765 $ 10,060 $ (4,370) $ Acoustic Electric $ 83,700 47,250 36,450 4,290 8,500 17,700 1,710 6,010 2,610 40,820 0 0 $ < Required 1 Electric Combined 0 0 $ 0 0 Required 2 >
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter25: Departmental Accounting
Section: Chapter Questions
Problem 9SPB
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