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:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Required 1
Book Division
$ 7,960,000
www
2,160,000
1,093,500
$4,706,500
Required 2
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)
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:
in Manning Didelan is allminstad?
Total
$ 11,327,700
1. Compute the contribution margin and the segment margin of each division and the company as a whole.
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.
3,236,800
2,334,700
$ 5,756,200
372,500
4,129,900
$ 1,253,800
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