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 $962,500 $820,000 $142,500 Cost of sales 655,200 541,200 114,000 Gross profit 307,300 278,800 28,500 Direct expenses $144,000 $120,000 $24,000 Common expenses 117,000 101,000 16,000 Total expenses 261,000 221,000 40,000 Net income (Loss) $46,300 $57,800 $(11,500) 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