#8

Question 8 Answer saved Marked out of 1.00 P Flag question Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows: Total Departments 1-3 Department 4 Sales $1,150,000 $950,000 $200,000 Cost of sales 752,500 598,500 154,000 Gross profit 397,500 351,500 46,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 141,000 113,000 28,000 Total expenses 285,000 233,000 52,000 Net income (Loss) $112,500 $118,500 $(6,000) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 0 % Department 4 0 % b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $ 0