University 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 DIVISION PROFESSIONAL DIVISION COMPANY TOTAL SALES 200,000 410,000 610,000 LESS VARIABLE EXPENSES 36,000 225,500 261,500 CONTRIBUTION MARGIN 164,000 184,500 348,500 LESS DIRECT FIXED EXPENSES 15,000 205,500 220,000 NET INCOME 149,000 (20,500) 128,500 Management is concerned about the Professional Division and requests additional analysis. Additional information regarding May operations of the Professional Division is as follows: ACCOUNTING EXECUTIVE MANAGEMENT SALES 140,000 140,000 130,000 VARIABLE MANUFACTURING EXPENSES AS % OF SALES 60% 40% 50% OTHER VARIABLE EXPENSES AS % OF SALES 5% 5% 5% DIRECT FIXED EXPENSES 50,000 75,000 50,000 ALLOCATED COMMON FIXED EXPENSES 5,000 2,000 7,000 The professional accounting books are sold to auditors and controllers. The current information on these markets is as follows: SALES MARKET AUDITORS CONTROLLERS SALES 30,000 110,000 VARIABLE MANUFACTURING EXPENSES AS % OF SALES 60% 60% OTHER VARIABLE EXPENSES AS % OF SALES 16% 2% DIRECT FIXED EXPENSES 10,000 25,000 ALLOCATED COMMON FIXED EXPENSES 4,000 8,000 a. Prepare an income statement segmented by product for the Professional Division. Include a column for the division as a whole. b. Prepare an income statement segmented by market for the accounting books of the Professional Division. c. Evaluate which accounting books the Professional Division should keep or discontinue in the short run. d. What is the correct long-run decision? Explain fully, including any possible risks associated with your recommendation.