Question

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: Book Division $ 7,960,000 Magazine Division $ 3,367,700 Total $ 11,327,700 Sales Revenue Cost of Goods sold Variable costs Fixed costs Gross Profit Operating Expenses Variable Fixed Net income 2,160,000 1,093,500 $4,706,500 1,076,800 1,241,200 $ 1,049,700 3,236,809 2,334,700 $ 5,756,200 151,000 2,932,000 $ 1,623,500 221,500 1,197,900 (369,700) 372,500 4,129,900 1,253,800 $ $ 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 1 Required 2 Present the financial information in the form of a segmented income statement Book Division Total Magazine Division $ 3,367,700 $ 7,960,000 $ 11,327,700 Sales revenue Variable costs Cost of goods sold Operating expenses 2.160,000 151,000 1,076,800 221,500 3,236,800 372,500 5,649,000 2,069,400 7.718.400 Contribution margin Direct foced costs Manufacturing costs Operating expenses Segment margin Common fixed costs Do you want to switch to tablet mode? This makes Windows more touch-friendly when using your device as a tablet. Net Income (loss) Always ask me before switching

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Answer 1

Requirement | Segmented Income Statement Particulars Book Division Magazine Division Sales Revenue $ 7,960,000 $ 3,367,700 $ Total 11,327,700 Variable Costs : - Cost of Goods Sold - Operating Expenses Total Variable Costs $ $ $ 2,160,000 $ 151,000 $ 2,311,000 $ 1,076,800 $ 221,500 $ 1,298,300 $ 3,236,800 372,500 3,609,300 Contribution Margin $ 5,649,000 $ 2,069,400 $ 7,718,400 $ Direct Fixed Costs : - Manufacturing Costs - Operating Expenses Total Direct Fixed Costs $ $ $ 218,700 $ 1,759,200 $ 1,977,900 $ 248,240 $ 718,740 $ 966,980 $ 466,940 2,477,940 2,944,880 Segment Margin $ 3,671,100 $ 1,102,420 $ 4,773,520 Less : Common Fixed Costs - Manufacturing Costs - Operating Expenses Total Common Costs $ $ $ 1,867,760 1,651,960 3,519,720 Net Income / (Loss) $ 1,253,800