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A guitar manufacturer is considering eliminating its electric guitar division because its $102,590 expenses are higher than i

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Answer #1
Electric Guitar Division is: Kept Eliminated
Sales 95,690
Expenses:
Direct Expense 11,850 2,450
Indirect Expense 560 1,800
Service department costs 9,000 2,930
Cost of goods sold 74,000
Total Expenses 95,410 7,180
Net Income (Loss) 280 (7,180)
Revenue from electric guitar division 95,690
Avoidable expense 95,410
Revenues are greater than (less than ) avoidable expenses by 280

Division should be kept.

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