The Footwear Department of Lee\'s Department Store had sales of $205,000, cost o

Question

The Footwear Department of Lee's Department Store had sales of $205,000, cost of goods sold of $141,000, indirect expenses of $14,950, and direct expenses of $29,200 for the current period. The Footwear Department's contribution to overhead as a percent of sales is:

31.22%.

68.69%.

9.68%.

16.98%.

85.76%.

The Footwear Department of Lee's Department Store had sales of $205,000, cost of goods sold of $141,000, indirect expenses of $14,950, and direct expenses of $29,200 for the current period. The Footwear Department's contribution to overhead as a percent of sales is:

Explanation / Answer

To calculate overhead, all you need is the department sales, the cost of goods sold, and direct expenses. For each department, calculate the profit by subtracting costs from sales (NOT including indirect expense):

= $205,000 - $141,000 - $29,200

= $34,800 <-- This is their departmental contribution to overhead.

=$34,800/$205000

=>16.98%

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