Chapter 24, Problem 7E

To determine

Introduction: -

Departmental Contribution to Overhead displays the amount of contribution earned by the department to cover the indirect overheads of the organisation as a whole. The unrelated indirect overheads should be allocated to the department based on the department’s contribution to overhead.

Departmental Contribution to Overhead

=

Gross Profit (of the department)

-

Total Direct Expenses (of the department)

To calculate: -

1. A departmental income statement for 2015
2. A departmental contribution to overhead report for 2015
3. Based on these two performance report, should Jansen eliminate the ski department