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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
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: Magazine Division $3,316,900 Total $11,156,900 Book Division Sales $7,840,000 Revenue Cost of Goods sold Variable 2,040,000 costs Fixed costs 1,081,500 Gross Profit $4,718,500 Operating Expenses Variable 139,000 Fixed 2,920,000 Net Income $1,659,500 1,016,900 I 3,056,900 1, 210300 $1,089,700 2,291,800 $ 5,808, 200 203,900 342,900 1,191,200 4,111,200 $ 305,400) $ 1,354,100 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 Required 2 Present the financial information in the form of a segmented Income statement (using the contribution margin approach). Book Magazine Division Division Total Variable costs Direct fixed costs Common fixed costs Net Income (loss) Required Required 2 > 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 Magazine Division Division Total Sales Revenue $7,840,000 $3,316,900 $11,156,900 Cost of Goods sold Variable 2,040,000 1,016,900 costs 3,056,900 Fixed costs 1,081,500 1,210,300 2,291,800 Gross Profit $4,718,500 $1,089,700 $ 5,808,200 Operating Expenses Variable 139,000 203,900 342,900 Fixed 2,920,000 1,191,200 4,111,200 Net income $1,659,500 $ (305,400) $ 1,354,100 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 Required 2 What will be the impact on net income if the Magazine Division is eliminated? Impact on net income
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