Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

تمرين 33

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's contribution to overhead.
2. Based on contribution to overhead, should the electric guitar department be eliminated