College Textbook Publishers Inc. has prepared income statements segmented by divisions, but management is still uncertain about actual performance. Financial information for May is given as follows:

Management is concerned about the Professional Division and requests additional analysis. Additional information regarding May operations of the Professional Division is as follows:

Required

a. Prepare an income statement segmented by product for the Professional Division. Include a column for the division as a whole.

b. Prepare an income statement segmented by market for the Accounting Books Segment of the Professional Division.

c. Evaluate which Accounting Books Segment the Professional Division should keep or discontinue in the short run.

d. What is the correct long-run decision? Explain fully, including any possible risks associated with your recommendation.

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Textbook Professional Company Division Division Total Sales. $100,000 $205,000 $305,000 Less variable expenses Manufacturing... 16,000 102,500 118,500 Selling and administrative. 2,200 12,300 14,500 Total (18,200) (114.800) (133,000) Contribution margin Less direct fixed expenses. 81,800 (10,000) 90,200 (100,000) 172,000 (110,000) Net income... $ 71,800 $ (9,800) $ 62,000