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. Anderson$$s information about the two divisions is as follows:

Book Division Magazine Division Total

Sales Revenue $ $8,040,000$ $ $3,401,500$ $ $11,441,500$

Cost of Goods sold

Variable manufacturing costs $2,240,0001,116,6003,356,600$

Fixed manufacturing costs $1,101,5001,261,8002,363,300$

Gross Profit $ $4,698,500$ $ $1,023,100$ $ $5,721,600$

Operating Expenses

Variable operating expenses $159,000233,200392,200$

Fixed operating expenses $2,940,0001,202,4004,142,400$

Net income $ $1,599,500$ $ $(412,500)$ $ $1,187,000$

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?