Answer:
12%
Explanation:
Contribution can be defined as the portion sales revenue that covers the fixed cost as it is not consumed by the variable cost.
<u>Workings</u>
Dept. Sales Cost of goods Direct Expenses Indirect exp Contribution
1 1,000,000 700,000 100,000 80,000 120,000
2 400,000 150,000 40,000 100,000 110,000
3 700,000 300,000 150,000 20,000 230,000
Contribution= sales revenue - direct cost and direct expenses
For Department 1 =
Contribution = 1,000,000 -700,000-100,000-80,000 = 120,000
Contribution as a percentage of sale =
Sales = 1,000,000
Contribution = 120,000
120,000/1,000,000*100 = 12%