Question

Departmental contribution to overhead is calculated as revenues of the department less:

A. Controllable costs.

B. Product and period costs.

C. Direct expenses.

D. Direct and indirect costs.

E. Joint costs.

Answer 1

Answer:

C. Direct expenses.

Explanation:

The departmental contribution is computed by subtracting the direct expense from the revenues

In mathematically,

Departmental contribution = Department revenues - direct expense

The expenses like - rent, utilities, taxes, insurance, etc

It is come after paying the direct expenses related to the overhead.

Hence, the most appropriate option is c.