Anderson Publishing has two divisions: Book Publishing & Magazine Publishing. The Magazine division has been losing money for thelast 5 years and Anderson is considering eliminating that division. Anderson's information about the two divisions is as follows:MagazineDivisionTotalBook Division$ 7,810,000$ 3,310,000$11,120,e00Sales RevenueCost of Goods soldVariable costsFixed costs3,003,000278,6002,003,00077,600$ 5,729,4001,000,000201,eee2,109,e0eGross ProfitOperating ExpensesVariable$7,838,400136,0003,917,000$ 1,676,400199,0002,190,000$335,0006,107,000$ 1,396,400Fixed(280,eee)Net incomeThe variable operating expenses are directly attributable to the division. Of the total fixed costs (manufacturing and operating),$4,001,000 are shared between the divisions, allocated $2,812,000 to the Book Division and the remaining to the Magazine DivisionThe remainder of the fixed costs are directly attributable to each division.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?

Segmented Income Statement (using the contribution margin approach):Out of the total fixed cost…

Answered: Anderson Publishing has two divisions:…

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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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 Magazine Division Total Sales Revenue $ 7,800,000 $ 3,300,000 $ 11,100,000 Cost of Goods sold Variable costs 2,000,000 997,000 2,997,000 Fixed costs 1,077,500 1,200,000 2,277,500 Gross Profit $ 4,722,500 $ 1,103,000 $ 5,825,500 Operating Expenses Variable 135,000 198,000 333,000 Fixed 2,916,000 1,189,000 4,105,000 Net income $ 1,671,500 $ (284,000 ) $ 1,387,500 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…
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Subject :- Account
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