Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirectexpenses. The manufacturer is considering ellminsting its Electric Guitar department because it shows a loss.For Year Ended December 31SalesCost of goods soldGross profitExpensesAdvertisingDepreciation EquipmentSalariesSupplies usedRentUtilitiesTotal expensesIncome (loss)Departmental Income StatementsRequired 1 Required 2Acoustic$ 183,30044,87558,425For Year Ended December 31Direct expenses4,99510,00019,001,9487,8953,83546,945$ 11,488Total direct expensesDepartmental contribution to overheadElectric1. Prepares departmental contribution to overhead report2. Based on contribution to overhead, should the electric guitar department be eliminated?Complete this question by entering your answers in the tabs below.Prepare a departmental contribution to overhead report.Departmental Contribution to OverheadAcousto$ 83,40046,95836,4588,54017,5881,7786,0382,58048,748$ (4,200)ElectricCombined

The business incurs various expenses but the direct expenses are those that are directly related to…

Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer la considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 183,300 44,875 58,425 Electric $ 83,400 46,958 36,458 Required 1 Required 2 4,905 4,328 10,000 8,540 19,808 17,500 1,940 1,770 7,885 5,030 3,035 2,589 46,945 48,748 $ 11,488 $ (4,200) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead

Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer la considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Acoustic $ 183,300 44,875 58,425 Electric $ 83,400 46,958 36,458 Required 1 Required 2 4,905 4,328 10,000 8,540 19,808 17,500 1,940 1,770 7,885 5,030 3,035 2,589 46,945 48,748 $ 11,488 $ (4,200) 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Complete this question by entering your answers in the tabs below. Prepare a departmental contribution to overhead report. Departmental Contribution to Overhead

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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4. Undertake a sensitivity analysis assessing the impact of operating leverage on net income based on the following two what-if scenarios for both the divisions. (Use appropriate formula and format the cells as 'currency'): a) Conservative scenario: What would be the projected net income (loss) if sales decrease by 40% in the fourth quarter? b) Optimistic scenario: What would be the projected net income (loss) if sales increase by 40% in the fourth quarter? 5. Assume that you are in the position of Cost Accountant in Fitness Fast Inc. Management seeks clarification from you on the notable differences in breakeven units between the two divisions, despite both divisions reporting identical total sales and net income for the period. Additionally, They are keen to understand the reasons behind the substantial disparities in the comparative data of the sensitivity analysis for the two divisions. Explain the reasons for such differences to management. (Write your answer in the Explanation…
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Below are departmental income statements for a guitar manufacturer. The company classifies advertising, rent, and utilities as indirect expenses. The manufacturer is considering eliminating its Electric Guitar department because it shows a loss. Departmental Income Statements For Year Ended December 31 Sales Cost of goods sold Gross profit Expenses Advertising Depreciation-Equipment Salaries Supplies used Rent Utilities Total expenses Income (loss) Required 1 Required 2 Acoustic $ 102,100 44,975 57,125 For Year Ended December 31 Gross profit Direct expenses 15,015 10,100 20,100 1. Prepare a departmental contribution to overhead report. 2. Based on contribution to overhead, should the electric guitar department be eliminated? Prepare a departmental contribution to overhead report. 1,960 7,065 2,995 47,235 $ 9,890 Complete this question by entering your answers in the tabs below. Total direct expenses Departmental contribution to overhead Departmental Contribution to Overhead $ Acoustic…
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