A guitar manufacturer is considering eliminating its electric guitar division because its $100,280 expenses are higher than its $94,300 sales. The company reports the following expenses for this division.
Avoidable Unavoidable
Expense Expense
Cost of goods sold $56, 000
Direct expenses 9,250 $1,250
Indirect expenses 470 1, 600
Service department costs 6,000 1,430
Should the division be eliminated?
Electric Guitar Division is: Kept Eliminated
Sales 72,000
Expenses:
Direct expenses 1,250
Indirect expenses 1,600
Service department costs 1,430
Cost of goods sold 56,000
Total expenses 56,000 4,280
Net income (loss) 4,280
Revenues from electric guitar division
Avoidable expenses
Revenues are greater than (less than) avoidable expenses by
The electric guitar division should be:________.