Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for the year are as follows: Total Departments 1-3 Department 4 Sales $950,000 $800,000 $150,000 Cost of sales 626,000 512,000 114,000 Gross profit $324,000 $288,000 $36,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 125,000 105,000 20,000 Total expenses $269,000 $225,000 $44,000 Net income (Loss) $55,000 $63,000 $(8,000) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 Answer 1%Department 4 Answer 2% 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: $Answer 3

Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for the year are as follows: Total Departments 1-3 Department 4 Sales $950,000 $800,000 $150,000 Cost of sales 626,000 512,000 114,000 Gross profit $324,000 $288,000 $36,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 125,000 105,000 20,000 Total expenses $269,000 $225,000 $44,000 Net income (Loss) $55,000 $63,000 $(8,000) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 Answer 1%Department 4 Answer 2% 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: $Answer 3

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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	Total	Departments 1-3	Department 4
Sales	$950,000	$800,000	$150,000
Cost of sales	626,000	512,000	114,000
Gross profit	$324,000	$288,000	$36,000
Direct expenses	$144,000	$120,000	$24,000
Common expenses	125,000	105,000	20,000
Total expenses	$269,000	$225,000	$44,000
Net income (Loss)	$55,000	$63,000	$(8,000)

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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 $962,000 $810,000 $152,000 Cost of sales 640,500 526,500 114,000 Gross profit $321,500 $283,500 $38,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 127,000 106,000 21,000 Total expenses $271,000 $226,000 $45,000 Net income (Loss) $50,500 $57,500 $(7,000) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 Answer%Department 4 Answer% 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: $Answer
Suresh Company reports the following segment (department) income results for the year. Department M Department N Department 0 Department P $ 82,000 $ 44,000 $ 78,000 $ 65,000 Sales Expenses Avoidable Unavoidable Total expenses Income (loss) Department Department M Department N Department O Department P Department T 17,300 45,400 57,800 21,600 75, 100 67,000 $ 6,900 $ (23,000) Decision 18,000 5,700 23,700 $ 54,300 21,500 54,300 75,800 $ (10,800) Department T $ 43,000 51,300 20,300 71, 600 $ (28,600) Total $ 312,000 a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated? 153,500 159, 700 313, 200 $ (1,200)
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 Answer=______%Department 4 Answer=______% 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: $_______
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Suresh Co. expects its five departments to yield the following income for next year.