Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 1's contribution to overhead as a percent of sales is:
A) 52.5%
B) 20.0%
C) 35.7%
D) 30.0%
E) 57.1%
B) 20.0%
Explanation: Sales - Cost of goods sold - Direct expenses = Contribution to overhead
1,000,000 - $700,000 - $100,000 = $200,000
Contribution to overhead/Sales = Contribution to overhead as a percent of sales
$200,000/$1,000,000 = 20%
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