Below are departmental income statements for a guitar manufacturer. The manufact

Question

Below are departmental income statements for a guitar manufacturer. The manufacturer is considering dropping its electric guitar department since it has a net loss. The company classifies advertising, rent, and utilities expenses as indirect. BEST GUITAR Departmental Income Statements For Year Ended December 31, 2011 Sales Cost of goods sold AcousticElectric $101,600 84,600 44,675 47,050 Gross profit Operating expenses 56,925 37,550 4,995 4,340 8,530 9,40017,500 1,740 5,960 2,9952,600 Advertising expense 10,130 Salaries expense Supplies expense Rent expense Utilities expense 1,950 7,035 Total operating expensers Net profit (loss 46,50540,67O $ 10.420 S (3,120) (1) Prepare a departmental contribution report that shows each department's contribution to overhead. (Input all amounts as positive values. Omit the "" sign in your response.) BEST GUITAR tal Sta For Year Ended December 31, 2011 Acoustic Dept. Electric Com Click to select (Click to select) (Click to select) Direct expenses (Click to select) 9 MacBook Pro esc

Explanation / Answer

WHOLESALE GUITARS DEPARTMENTAL CONTRIBUTION STATEMENTS FOR THE YEAR ENDED DECEMBER 31,2013 ACOUSTIC DEPARTMENT ELECTRIC DEPARTMENT COMBINED Sales 101,600 84,600 186,200 Less: Cost of Goods Sold 44,675 47,050 91,725 Gross Profit 56,925 37,550 94,475 Direct Expenses Salaries Expense 19,400 17,500 36,900 Depreciation Expense-Equipment 10,130 8,530 18,660 Supplies Expense 1,950 1,740 3,690 Total Direct Expenses 31,480 27,770 59,250 Departmental Contributions to Overhead 25,445 9,780 35,225 Indirect Expenses: Rent Expense 7,035 5,960 12,995 Utilities Expense 2,995 2,600 5,595 Advertising Expense 4,995 4,340 9,335 Total Indirect Expense 15,025 12,900 27,925 Net Income 10,420 -3,120 7,300

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