Use the following information to compute each department’s contribution to overhead. Which department contributes the largest amount toward total overhead? Department ADepartment BDepartment CSales$ 61,000$ 199,000$ 79,000Cost of goods sold38,430103,48041,870Gross profit22,57095,52037,130Total direct expenses4,98042,9408,266 Complete this question by entering your answers in the tabs below.Contribution to DepartmentalOverhead OverheadCompute each department's contribution to overhead.Contribution to overheadDepartment ADepartment B Department C Contribution to DepartmentalOverhead OverheadWhich department contributes the largest amount toward total overhead?Which department contributes the largest dollar amount to total overhead?

Overhead cost refers to the cost or amount incurred by the company in production of its goods and…

Answered: Use the following information to…

Use the following information to compute each department’s contribution to overhead. Which department contributes the largest amount toward total overhead?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 7P: Distribution of service department costs to production departments using the sequential distribution...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Use the following information to compute each department’s contribution to overhead. Which department contributes the largest amount toward total overhead?

	Department A	Department B	Department C
Sales	$ 61,000	$ 199,000	$ 79,000
Cost of goods sold	38,430	103,480	41,870
Gross profit	22,570	95,520	37,130
Total direct expenses	4,980	42,940	8,266

Complete this question by entering your answers in the tabs below.
Contribution to Departmental
Overhead Overhead
Compute each department's contribution to overhead.
Contribution to overhead
Department A
Department B Department C

Contribution to Departmental
Overhead Overhead
Which department contributes the largest amount toward total overhead?
Which department contributes the largest dollar amount to total overhead?

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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