The professional accounting books are sold to auditors and controllers. The current information on these markets is as follows: Accounting Books Segment Auditors Market Controllers Market Total Sales $18,000 $66,000 $84,000 Variable manufacturing expenses as a percentage of sales 609% 6096 Other variable expenses as a percentage of sales 69% 69% Direct fixed expenses $9,000 $18,000 $27,000 Allocated common fixed expenses $900 $1,200 $2,100 Required a. Prepare an income statement segmented by product for the Professional Division. Include a column for the division as a whole. Note: Do not use a negative sign with your answers with the exception of a negative product margin or a division loss which should have a negative sign. Business Books Publishers Inc. Professional Division: Segment and Divisional Income Statements For the Month of May Accounting Executive Management Professional Division Sales 84,000 * $ 84,000 * $ 78,000 v $ 246,000 Variable manufacturing 50,400 33,600 39,000 123,000 Manufacturing margin 33,600 v 50,400 39,000 123,000 Other variable expenses 4,200 4,200 3,900 12,300 Contribution margin 29,400 46,200 35,100 110,700 Total direct costs : Direct fixed expenses 30,000 44,080 30,000 104,080 Allocated common fixed expense 2,400 v 1,200 3,600 7,200 Total 32,400 45,280 33,600 v 111,280 Product margin $ (3,000) ~ $ 920 v $ 1,500 v (580) Unallocated common fixed expenses Professional division income (loss) $ 0 Xb. Prepare an income statement segmented by market for the Accounting Books Segment of the Professional Division. Note: Do not use a negative sign with your answers with the exception of a negative market margin, a market loss, or an accounting market loss which should have a negative sign. Business Books Publishers Inc. Professional Division Market Income Statements: Accounting Books Segment For the Month of May Auditors Accounting Books Segment Market Controllers Market Total Sales 18,000 v $ 66,000 v $ 84,000 Variable manufacturing 10,800 39,600 50,400 Manufacturing margin 7,200 26,400 33,600 Other variable expenses 900 3,300 v 4,200 Contribution margin 6,300 23,100 29,400 Direct fixed expenses 9,000 18,000 27,000 Market margin (2,700) 5,100 2,400 Allocated common fixed expenses 900 1,200 2,100 Market income (loss) $ 0 * $ 0 x 0 x Unallocated common fixed expenses O X Accounting market income (loss) $ O X c. Evaluate which Accounting Books Segment the Professional Division should keep or discontinue in the short run. Auditors Market Discontinue in the short run + Controllers Market Keep in the short runSegment Reporting and Analysis Business Book Publishers, Inc. has prepared income statements segmented by divisions, but management is still uncertain about actual performance. Financial information for May is given as follows: Textbook Professional Company Division Division Total Sales $120,000 $246,000 $366,000 Less variable expenses Manufacturing 19,200 123,000 142,200 Selling and administrative 6,000 12,300 18,300 Total 25,200 135,300 160,500 Contribution margin 94,800 1 10,700 205,500 Less direct fixed expenses 12,000 120,000 132,000 Net income (loss) $82,800 $(9,300) $73,500 Management is concerned about the Professional Division and requests additional analysis. Additional information regarding May operations of the Professional Division is as follows: Professional Division Accounting Executive Management Books Books Books Segment Segment Segment Sales $84,000 $84,000 $78,000 Variable manufacturing expenses as a percentage of sales 609% 40% 50% Other variable expenses as a percentage of sales 5% 596 Direct fixed expenses $30,000 $44,080 $30,000 Allocated common fixed expenses $2,400 $1,200 $3,600