Kat's Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2016 are as follows: Sales Cost of sales Gross profit Direct expenses Common expenses Total expenses Net income (loss) Total $930,000 650,000 $280,000 $150,000 75,000 225,000 $55,000 Departments 1-3 $700,000 500,000 $200,000 $90,000 45,000 $135,000 $65,000 Department 4 $230,000 150,000 $80,000 $60,000 30,000 $90,000 S(10,000) What will be the effect on the total firm net income if department 4 is eliminated? (Ignore the effect of income tax.) |