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

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

a. Controllable costs.

b. Product and period costs.

c. Direct expenses.

d. Direct and indirect costs.

e. Joint costs.

Answer: c. Direct expenses.

Departmental contribution to overhead is determined by subtracting the direct cost of the department from its total gross sales. Semi-variable expenses are costs that are related to the activity volume up to some extent and include expenditures that occurred directly in relation to production or services are considered as direct expenses or variable costs. Through subtraction of such direct costs from the sales, one can determine the extent to which the department contributes to covering the overhead or fixed cost of the business.