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 $1,000,000 $900,000 $100,000 Cost of sales 631,000 558,000 73,000 Gross profit 369,000 342,000 27,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 107,000 96,000 11,000 Total expenses 251,000 216,000 35,000 Net income (Loss) $118,000 $126,000 $(8,000) 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
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 $1,000,000 $900,000 $100,000
Cost of sales 631,000 558,000 73,000
Gross profit 369,000 342,000 27,000
Direct expenses $144,000 $120,000 $24,000
Common expenses 107,000 96,000 11,000
Total expenses 251,000 216,000 35,000
Net income (Loss) $118,000 $126,000 $(8,000)
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
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