Anderson Publishing has two divisions: Book Publishing and Magazine Publishing. The Magazine division has been losing money for the last five years and Anderson is considering eliminating that division. Andersons information about the two divisions is as follows:

	Book Division	Magazine Division	Total
Sales Revenue	$ 8,060,000	$ 3,410,000	$ 11,470,000
Cost of Goods sold
Variable manufacturing costs	2,260,000	1,126,600	3,386,600
Fixed manufacturing costs	1,103,500	1,267,000	2,370,500
Gross Profit	$ 4,696,500	$ 1,016,400	$ 5,712,900
Operating Expenses
Variable operating expenses	161,000	236,100	397,100
Fixed operating expenses	2,942,000	1,203,500	4,145,500
Net income	$ 1,593,500	$ (423,200)	$ 1,170,300

Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attributable to each division. The remaining are common or shared between the two divisions.

Required:

Compute the contribution margin and the segment margin of each division and the company as a whole.

What will be the impact on net income if the Magazine Division is eliminated?

ompute the contribution margin and segment margin for each division and the company as a whole.

Requirement 1

	Book Division	Magazine Division	Total
Contribution Margin
Segment Margin

Requirement 2

What will be the impact on net income if the Magazine Division is eliminated?

Impact on net income