Analyze Your Profit Contribution

Note: The incremental column excludes overhead expenses such as rent, salaries and utilities. Assume the variable order-processing costs are $5 per order. The incremental contribution to profit and overhead from this mailing was $336,071, or 13.8 percent of net sales.

This amount can contribute and be applied to the profit and overhead. When you apply the overhead expenses (i.e., fully absorbed basis), the pre-tax profit amounted to $133,307, or 5.5 percent of net sales. Overhead expenses amounted to $412,763, or 17 percent of net sales.