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A company has sales of $107,000; cost of goods sold of $68,870; and total direct expenses of $7,420. The department’ contribution to overhead is:

Question

A company has sales of 107,000;costofgoodssoldof107,000; cost of goods sold of 68,870; and total direct expenses of $7,420. The department’ contribution to overhead is:

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Solution

To calculate the department's contribution to overhead, you first need to determine the gross profit, then subtract the total direct expenses.

Step 1: Calculate Gross Profit Gross Profit = Sales - Cost of Goods Sold Gross Profit = 107,000107,000 - 68,870 = $38,130

Step 2: Subtract Total Direct Expenses Department's Contribution to Overhead = Gross Profit - Total Direct Expenses Department's Contribution to Overhead = 38,13038,130 - 7,420 = $30,710

So, the department's contribution to overhead is $30,710.

This problem has been solved

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