E7-12 (Algo) Analyzing Keep-or-Drop Decision [LO 7-2, 7-5] Anderson Publishing has two divisions: Book Publishing & Magazine Publishing. The Magazine division has been losing money for the last 5 years and Anderson is considering eliminating that division. Anderson's information about the two divisions is as follows: Book Division $ 8,200,000 Magazine Division $ 3,469,200 Total $ 11,669,200 Sales Revenue Cost of Goods sold Variable costs Fixed costs Gross Profit Operating Expenses Variable Fixed Net income 2,400,000 1,117,500 $ 4,682,500 1,196,400 1,303,000 $ 969,800 3,596,400 2,420,500 $ 5,652,300 175,000 2,956,000 $ 1,551,500 256,700 1,211,400 (498,300) 431,700 4,167,400 $ 1,053,200 $ Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attribute to each division. The remainder are common or shared between the two divisions. Required: 1. Present the financial information in the form of a segmented income statement (using the contribution margin approach). 2. What will be the impact on net income if the Magazine Division is eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 1 Required 2 Present the financial information in the form of a segmented income statement (using the contribution margin approach). Book Division Magazine Total Division $ 3,469,200 $ 11,669,200 $ 8,200,000 Sales revenue Variable costs Cost of goods sold Operating expenses 2,400,000 175,000 3,596,400 1,196,400 256,700 431,700 5,625,000 2,016,100 7,641,100 Contribution margin Direct fixed costs Manufacturing costs Operating expenses 223,500 1,773,600 260,600 .726,840 484,100 2,500,440 3,627,900 1,028,660 4,656,560 Segment margin Common fixed costs Manufacturing costs Operating expenses 1,936,400 1,666.960 Net income (loss) $ 1,053,200 Required Required 2 equired: - Present the financial information in the form of a segmented income statement (using the contribution 2. What will be the impact on net income if the Magazine Division is eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What will be the impact on net income if the Magazine Division is eliminated? Impact on net income