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: Book Division Magazine Division Total Sales Revenue $ 8,160,000 $ 3,452,300 $ 11,612,300 Cost of Goods sold Variable manufacturing costs 2,360,000 1,176,500 3,536,500 Fixed manufacturing costs 1,113,500 1,292,700 2,406,200 Gross Profit $ 4,686,500 $ 983,100 $ 5,669,600 Operating Expenses Variable operating expenses 171,000 250,800 421,800 Fixed operating expenses 2,952,000 1,209,100 4,161,100 Net income $ 1,563,500 $ (476,800) $ 1,086,700 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: 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? Please dont give solution plagiarised and image based thanku
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: Book Division Magazine Division Total Sales Revenue $ 8,160,000 $ 3,452,300 $ 11,612,300 Cost of Goods sold Variable manufacturing costs 2,360,000 1,176,500 3,536,500 Fixed manufacturing costs 1,113,500 1,292,700 2,406,200 Gross Profit $ 4,686,500 $ 983,100 $ 5,669,600 Operating Expenses Variable operating expenses 171,000 250,800 421,800 Fixed operating expenses 2,952,000 1,209,100 4,161,100 Net income $ 1,563,500 $ (476,800) $ 1,086,700 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: 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? Please dont give solution plagiarised and image based thanku
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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:
| Book Division | Magazine Division | Total | |
|---|---|---|---|
| Sales Revenue | $ 8,160,000 | $ 3,452,300 | $ 11,612,300 |
| Cost of Goods sold | |||
| Variable |
2,360,000 | 1,176,500 | 3,536,500 |
| Fixed manufacturing costs | 1,113,500 | 1,292,700 | 2,406,200 |
| Gross Profit | $ 4,686,500 | $ 983,100 | $ 5,669,600 |
| Operating Expenses | |||
| Variable operating expenses | 171,000 | 250,800 | 421,800 |
| Fixed operating expenses | 2,952,000 | 1,209,100 | 4,161,100 |
| Net income | $ 1,563,500 | $ (476,800) | $ 1,086,700 |
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:
- 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?
Please dont give solution plagiarised and image based thanku
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education