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. Anderson's information about the two divisions is as follows: Sales Revenue Cost of Goods sold Variable manufacturing costs Fixed manufacturing costs Gross Profit Operating Expenses Variable operating expenses Fixed operating expenses Net income Book Division $ 7,960,000 2,160,000 1,093,500 $4,706,500 151,000 2,932,000 $ 1,623,500 Magazine Division $ 3,367,700 1,076,800 1,241,200 $1,049,700 221,500 1,197,900 $ (369,700) Total $ 11,327,700 3,236,800 2,334,700 $ 5,756,200 372,500 4,129,900 $ 1,253,800 Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attributable to each division. The remaining are common or shared between the two divisions. Required:

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. Anderson's information about the two divisions is as follows: Sales Revenue Cost of Goods sold Variable manufacturing costs Fixed manufacturing costs Gross Profit Operating Expenses Variable operating expenses Fixed operating expenses Net income Book Division $ 7,960,000 2,160,000 1,093,500 $4,706,500 151,000 2,932,000 $ 1,623,500 Magazine Division $ 3,367,700 1,076,800 1,241,200 $1,049,700 221,500 1,197,900 $ (369,700) Total $ 11,327,700 3,236,800 2,334,700 $ 5,756,200 372,500 4,129,900 $ 1,253,800 Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attributable to each division. The remaining are common or shared between the two divisions. Required:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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