The Footwear Department of Lee'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 Footwear 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%.

Question

Quizplus · Accepted Answer

The Footwear Department's contribution to overhead can be calculated as follows:
Contribution to Overhead = Sales - Cost of Goods Sold - Direct Expenses 
Contribution to Overhead = $188,000 - $132,500 - $27,500 
Contribution to Overhead = $28,000 
To calculate the contribution to overhead as a percentage of sales, we can use the following formula: 
Contribution to Overhead / Sales x 100%
= $28,000 / $188,000 x 100% 
= 14.89%
Therefore, the Footwear Department's contribution to overhead as a percent of sales is approximately 14.9%. The answer is B.

The Footwear Department of Lee's Department Store Had Sales of $188,000