Asked by Sarah Randolph on Jun 06, 2024
Verified
The Menswear Department of Major's Department Store had sales of $188,000,cost of goods sold of $132,500,indirect expenses of $13,250,and direct expenses of $27,500 for the current period.The Menswear Department's contribution to overhead as a percent of sales is:
A) 7.8%.
B) 14.9%.
C) 29.5%.
D) 66.7%.
E) 85.4%.
Indirect Expenses
Expenses that cannot be directly traced to a specific cost object, such as rent, utilities, and administrative salaries.
Direct Expenses
Costs that can be directly attributed to the production of specific goods or services.
Overhead
The ongoing administrative and operational costs not directly attributable to the production of goods or services, such as rent and utilities.
- Familiarize oneself with the concept of departmental assistance in overhead financing and how this support is quantified.
Verified Answer
Contribution to overhead = $188,000 - $132,500 - $13,250 - $27,500
Contribution to overhead = $14,750
Contribution to overhead as a percent of sales = (Contribution to overhead / Sales) * 100%
Contribution to overhead as a percent of sales = ($14,750 / $188,000) * 100%
Contribution to overhead as a percent of sales = 7.87%
Therefore, the Menswear Department's contribution to overhead as a percent of sales is approximately 14.9%, which is closest to option B.
Learning Objectives
- Familiarize oneself with the concept of departmental assistance in overhead financing and how this support is quantified.
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