ERCISES-SETA Dropping lo be profitable except department 4. Operating data for 2
ID: 2544024 • Letter: E
Question
ERCISES-SETA Dropping lo be profitable except department 4. Operating data for 2016 are as follows: ing Unprofitable Department Thomas Corporation has four departments, all of which appear be pro -IA. L04 SERVICE MERCHAN Total $950,000 634,000 $316,000 $144,000 123,000 $267,000 49,000 Departments 1-3 $800,000 520,000 $280,000 $120,000 105,000 $225,000 55,000 Department 4 $150,000 114,000 36,000 $24,000 18,000 42,000 (6,000) Direct expenses . . Common expenses . Required Calculate the gross profit percentage for departments 1-3 combined and for department 4 What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) b.Explanation / Answer
A.
Gross profit percentage = gross profit / sales *100
For department 1-3
= 280000 / 800000 * 100
35 %
For dep 4
= 36000/ 150000
= 24 %
B.
At this time common expense are shared by the both the department however in case where department 4 is eliminated then whole 123000 has to beared by 1-3 department.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.