Dropping Unprofitable DepartmentPenn Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows:Departments 1-3 Department 4Total$1,230,000$1,050,000801,900661,500428,100388,500$177,000$150,000145,200122,600Total expenses322,200272,600Net income (Loss) $105,900$115,900a. Calculate the gross profit percentage for departments 1-3 combined and for department 4.Department 1-3Department 4b. 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: $SalesCost of salesGross profitDirect expensesCommon expenses%%$180,000140,40039,600$27,00022,60049,600$(10,000)

The firm total gross profit, P=$428100. Gross Profit for departments 1-3 is $388500. Gross Profit…

enn Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follo Total Departments 1-3 Department 4 $1.230.000 ales $1.050.000 $180.000

enn Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follo Total Departments 1-3 Department 4 $1.230.000 ales $1.050.000 $180.000

Algebra and Trigonometry (6th Edition)

6th Edition

ISBN:9780134463216

Author:Robert F. Blitzer

Publisher:Robert F. Blitzer

ChapterP: Prerequisites: Fundamental Concepts Of Algebra

Section: Chapter Questions

Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...

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Question

Dropping Unprofitable Department
Penn Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows:
Departments 1-3 Department 4
Total
$1,230,000
$1,050,000
801,900
661,500
428,100
388,500
$177,000
$150,000
145,200
122,600
Total expenses
322,200
272,600
Net income (Loss) $105,900
$115,900
a. Calculate the gross profit percentage for departments 1-3 combined and for department 4.
Department 1-3
Department 4
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: $
Sales
Cost of sales
Gross profit
Direct expenses
Common expenses
%
%
$180,000
140,400
39,600
$27,000
22,600
49,600
$(10,000)

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