1. Below are departmental income statements for a guitar manufacturer. The manuf

Question

1. 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 WHOLESALE GUITARS Departmental Income Statements For Year Ended December 31, 2015 Acoustic Electric Sales Cost of goods sold $ 112,500$105,500 66,750 55,675 56,82538,750 Gross profit Operating expenses Advertising expense Depreciation expense equipment Salaries expense 8.075 6,250 10.150 9,000 17.30013500 1700 Rent expense Utilities expense 2,030 6,105 3,045 2.550 otal operating expenses Net income (loss) $ 10. 120 S (200) Type here to search

Explanation / Answer

Accoustic Electirc combined dept dept Sales 112,500 105,500 218,000 Cost of goods sold 55,675 66,750 122,425 Gross profit 56,825 38,750 95,575 Direct expenses Depreciation expense-Equipment 10,150 9,000 19,150 Salaries expense 17,300 13,500 30,800 supplies expense 2,030 1,700 3,730 total direct expense 29,480 24,200 53,680 Departmental conribution to overhead 27,345 14,550 41,895 indirect expenses Advertising expense 14,325 rent expense 12,055 utilities expense 5,595 total indirect expense 31,975 net income 9,920 N0

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