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Question

2? Homework x GQS 25-12 Decision To Ac C ezto.mheducation.com/hm.tpx x: IL QS 23-13 Segment elimination LO A1 A guitar manufacturer is considering eliminating its electric guitar division because its $83.430 expenses are higher than its $77.560 sales. The company reports the following expenses for this division Cost of goods sold Direct expenses Indirect expenses Service department costs $58,500 11,550 650 6,600 $2,350 1.900 1,880 Should the division be eliminated? Electric Guitar Division is Kept Sales Expenses Total expenses Net income (loss) Revenues from electric guitar division Avoidable expenses Revenues are greater than (less than) avoidable expenses by OType here to search

Explanation / Answer

Kept Eliminated Sales 77560 0 Expenses: Cost of goods sold 58500 0 Direct expenses 11550 2350 Indirect expenses 650 1900 Service department costs 6600 1880 Total expenses 77300 6130 Net income (loss) 260 -6130 The electric guitar division should be kept

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