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.