Penn Corporation has four departments, all of which appear to be profitable except department 4. Operating data
Fantastic news! We've Found the answer you've been seeking!
Question:
Penn 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 | $1,052,000 | $900,000 | $152,000 | |
Cost of sales | 654,000 | 540,000 | 114,000 | |
Gross profit | $398,000 | $360,000 | $38,000 | |
Direct expenses | $177,000 | $150,000 | $27,000 | |
Common expenses | 140,000 | 120,000 | 20,000 | |
Total expenses | $317,000 | $270,000 | $47,000 | |
Net income (Loss) | $81,000 | $90,000 | $(9,000) |
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 the 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
Related Book For
Auditing The Art And Science Of Assurance Engagements
ISBN: 9780136692089
15th Canadian Edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan, Joanne C. Jones
Posted Date: