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U A Print Question 2 Not yet answered Marked out of 2.00 Flag question Dropping Unprofitable Department Thomas Corporation ha

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Answer #1
a
Gross profit percentage = Gross Profit/Sales
Gross profit percentage:
Department 1-3 38% =342000/900000
Department 4 27% =27000/100000
b
Total margin generated by Department 4 = Gross Profit-Direct expenses
Total margin generated by Department 4 = 27000-24000 = $3000
Firm's Total net income would decrease by $3000 if Department 4 is eliminated
Firm's net income = 118000-3000 = $115000
The firm's net income would be $115000
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