Gillaspie Brothers Outfitters sells equipment to outdoors enthusiasts. Sam Gillaspie, the companys president, just received the following income statement reporting the results of the past year.

		Hunting			Camping		Fishing			Total
Sales revenue		$1,250,000			$3,600,000		$2,380,000			$7,230,000
Variable cost of goods sold		850,000			2,340,000		1,904,000			5,094,000
Fixed cost of goods sold		115,000			188,000		166,000			469,000
Gross profit		285,000			1,072,000		310,000			1,667,000
Variable operating expenses		170,000			576,000		238,000			984,000
Fixed operating expenses		80,000			84,000		73,000			237,000
Common fixed costs		60,000			130,000		97,000			287,000
Operating income		($25,000	)		$282,000		($98,000	)		$159,000

Sam is concerned that two of the companys divisions are showing a loss, and he wonders if the company should stop selling hunting and fishing gear to concentrate solely on camping gear.

Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division. (If the amount is negative then enter with a negative sign preceding the number e.g. -5,125 or parenthesis. e.g. (5,125).)

Should Sam Close the hunting and fishing divisions? Why or why not?

Sam wants to change the allocation method used to allocate common fixed cost to allocation to the divisions. His plan is to allocate these cost based on sales revenue. Will this new allocation method change your decision on whether to close the hunting and fishing divisions? why or why not?