Penn Corporation has four departments, all of which appear to be profitable except department 4.

Operating data for 2016 are as follows:

a. Calculate the gross profit percentage for departments 1-3 combined and for department 4.

b. What effect would elimination of department 4 have had on total firm net income?

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Sales.. Cost of sales. Gross profit... Total $1,052,000 654,000 Departments 1-3 $900,000 540,000 Department 4 $ 398,000 $360,000 Direct expenses $ 177,000 $150,000 Common expenses 140,000 Total expenses.. $ 317,000 Net income (loss). 81,000 $ 90,000 120,000 $270,000 $152,000 114,000 $ 38,000 $ 27,000 20,000 $ 47,000 $ (9,000)