Thomas Corporation has four departments, all of which appear to be profitable except department 4.

Operating data for 2016 are as follows:

Required

a. Calculate the gross profit percentage for departments 1-3 combined and for department 4.

b. What effect would elimination of department 4 have had on total firm net income?

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Total Departments 1-3 Department 4 Sales.... Cost of sales. $950,000 634,000 $800,000 520,000 $150,000 114,000 Gross profit. Direct expenses $316,000 $280,000 $ 36,000 $144,000 123,000 $267,000 Common expenses $225,000 Total expenses. Net income (Loss).. $ 49,000 $ 55,000 $ (6,000) $120,000 105,000 $ 24,000 18,000 $ 42,000