A company classifies its rent, advertising, and utilities as indirect expenses. The company is considering eliminating its Guitars department because it shows a loss as follows. Departmental Income Statements For Year Ended December 31 Drums Sales Cost of goods sold Gross profit Expenses Rent Depreciation-Machinery Supervisory salaries Advertising Supplies used Utilities For Year Ended December 31 Gross profit Direct expenses $ 257,000 127,350 129,650 13,810 21,900 36,200 17,750 5,660 7,690 103,010 $ 26,640 Total direct expenses Departmental contribution to overhead Guitars $ 227,000 141,500 85,500 Total expenses Income (loss) Prepare a departmental contribution to overhead report. 13,500 19,600 28,600 14,100 5,000 6,700 87.500 $ (2,000) Departmental Contribution to Overhead Drums Guitars Combined

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