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Should the division be eliminated

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Question: A guitar manufacturer is considering eliminating its electric guitar division because its $76,000 expenses are higher than its $72,000 sales. The company reports the following expenses for this division. Should the division be eliminated?

                                                Avoidable Expenses                   Unavoidable Expenses

Cost of goods sold . . . . . . . . . . . . . . $55,000

Direct expenses . . . . . . . . . . . . . . . . 6,250                                         $2,250

Indirect expenses . . . . . . . . . . . . . . . 470                                            3,600

Service department costs . . . . . . . . . 7,000                                           1,430

Reference no: EM131539870

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