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.

  

(1)

Prepare a departmental contribution report that shows each department

WHOLESALE GUITARS
Departmental Income Statements
For Year Ended December 31, 2013 Acoustic Electric   Sales $ 102,800 $ 83,800   Cost of goods sold 44,275 47,250      Gross profit 58,525 36,550   Operating expenses      Advertising expense 5,065 4,250      Depreciation expense-equipment 10,150 8,560      Salaries expense 19,500 17,100      Supplies expense 1,940 1,790      Rent expense 7,035 6,020      Utilities expense 3,035 2,610      Total operating expenses 46,725 40,330      Net income (loss) $ 11,800 $ (3,780 )   

(1)

Prepare a departmental contribution report that shows each department

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, 2013 Acoustic Electric Sales $ 102,800 $ 83,800 Cost of goods sold 44,275 47,250 Gross profit 58,525 36,550 Operating expenses Advertising expense 5,065 4,250 Depreciation expense-equipment 10,150 8,560 Salaries expense 19,500 17,100 Supplies expense 1,940 1,790 Rent expense 7,035 6,020 Utilities expense 3,035 2,610 Total operating expenses 46,725 40,330 Net income (loss) $ 11,800 $ (3,780 ) (1) Prepare a departmental contribution report that shows each department???s c WHOLESALE GUITARS Departmental Contribution Statements For Year Ended December 31, 2013 Acoustic Dept. Electric Dept. Combined Direct expenses Total direct expenses Departmental contributions to overhead Indirect expenses Total indirect expenses ontribution to overhead.

Explanation / Answer

WHOLESALE GUITARS

DEPARTMENTAL CONTRIBUTION STATEMENTS

FOR THE YEAR ENDED DECEMBER 31,2013

WHOLESALE GUITARS

DEPARTMENTAL CONTRIBUTION STATEMENTS

FOR THE YEAR ENDED DECEMBER 31,2013

ACOUSTIC DEPARTMENT ELECTRIC DEPARTMENT COMBINED Sales 102,800 83,800 186,600 Less: Cost of Goods Sold 44,275 47,250 91,525 Gross Profit 58,525 36,550 95,075 Direct Expenses Salaries Expense 19,500 17,100 36,600 Depreciation Expense-Equipment 10,150 8,560 18,710 Supplies Expense 1,940 1,790 3,730 Total Direct Expenses 31,590 27,450 59,040 Departmental Contributions to Overhead 26,935 9,100 36,035 Indirect Expenses: Rent Expense 7,035 6,020 13,055 Utilities Expense 3,035 2,610 5,645 Advertising Expense 5,065 4,250 9,315 Total Indirect Expense 15,135 12,880 28,015 Net Income 11,800 (3,780) 8,020

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