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Anderson Publishing has two divisions: Book Publishing and Magazine Publishing. The Magazine division has been...

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Accounting

Anderson Publishing has two divisions: Book Publishing and Magazine Publishing. The Magazine division has been losing money for the last five years and Anderson is considering eliminating that division. Andersons information about the two divisions is as follows:
Book Division Magazine Division Total
Sales Revenue $ 8,040,000 $ 3,401,500 $ 11,441,500
Cost of Goods sold
Variable manufacturing costs 2,240,0001,116,6003,356,600
Fixed manufacturing costs 1,101,5001,261,8002,363,300
Gross Profit $ 4,698,500 $ 1,023,100 $ 5,721,600
Operating Expenses
Variable operating expenses 159,000233,200392,200
Fixed operating expenses 2,940,0001,202,4004,142,400
Net income $ 1,599,500 $ (412,500) $ 1,187,000
Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attributable to each division. The remaining are common or shared between the two divisions.
Required:
Compute the contribution margin and the segment margin of each division and the company as a whole.
What will be the impact on net income if the Magazine Division is eliminated?

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