Economics Homework Help

REQUIRED:

For this chapter’s online journal, I want you to think critically about the concept of “departmental contributions to overhead.”

Answer the following questions:

1. How is departmental contribution to overhead an effective tool in assessing each department’s performance?

2. See Exhibit 24.12 on page 1050 of your textbook. Calculate the departmental contributions margin to overhead for each department.

Departmental contribution margin to overhead = departmental contributions to overhead / Sales

For example, for the Hardware Department, the departmental contributions margin to overhead would be:

$29,400/$119,500 = 24.6%

3. Which department has the highest departmental contributions margin? What does that tell you about the performance of that department relative to the performance of other departments?