A guitar manufacturer is considering eliminating its electric guitar division because its S97,400 expenses are higher than its $92,240 sales

Accounting Apr 03, 2021

A guitar manufacturer is considering eliminating its electric guitar division because its S97,400 expenses are higher than its $92,240 sales. The company reports the following expenses for this division.
Avoidable Expenses Unavoidable Expenses
Cost of goods sold $ 70,000
Direct expenses 11,150 $1,850
Indirect expenses 770 2,100
Service department costs 10,000 1,530

Should the division be eliminated?

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