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2 E7-12 (Algo) Analyzing Keep-or-Drop Decision (LO 7-2, 7-5) 2 points look Print Anderson Publishing...

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Accounting

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2 E7-12 (Algo) Analyzing Keep-or-Drop Decision (LO 7-2, 7-5) 2 points look Print 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 Book Division Division Total Sales Revenue $ 7,960,000 $ 3,367, 700 $11, 327,700 Cost of Goods sold Variable costs 2,160,000 1.076, 800 3,236,800 Fixed costs 1,893,500 1,241,200 2, 334, 700 Gross Profit $4,706,500 $1,049, 700 $ 5,750,200 Operating Expenses Variable 151,09 221,5 372,500 Fixed 2,932, 000 1, 197, 900 4, 129,900 Net income $ 1,623,500 (360,700 1,253,800 References 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

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