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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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,591, 000 706, 760 884, 240 973,000 $ (88,760) In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the Accounting Department provided the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 351,000 $262,000 56% Division Central $ 660,000 36% $ 335,000 West $ 580,000 47% $206,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department believes increasing the West Division's monthly advertising by $25,000 will increase that division's sales by 18%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease)…
Flamengo Co is a sporting goods manufacturing. It has the following three divisions: Basketball Football Division Soccer Division Division Sales $1,250,000 Net operating income $25,000 $75,000 $36,000 Average operating assets $300,000 Return on investment 20% 15% Margin 0.1 0.08 Turnover 1.8 Target ROI 10% 15% 12% What is the turnover of the Football Division?
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…
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
LeBron's Bookstores has two divisions: media and books. The media division had another great year with net sales of $14 million, cost of goods sold of $8 million, operating expenses of $3 million, and income tax expense of $900,000. The book division did not do as well and was sold during the year. The loss from operations and sale of the book division was $400,000 before taxes and $280,000 after taxes. Assuming the sale of the book division is reported as a discontinued operation, at what amount did LeBron's Bookstores report the discontinued operations?
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,559,000 567,150 991,850 1,091,000 $ (99,150) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 359,000 $ 291,000 45% Division Central $ 640,000 24% $ 329,000 West 560,000 45% $ 204,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $22,000 based on the belief that it would increase that division's sales by 12%. Assuming these estimates are accurate, how much would…
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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: sales variable expenses Contribution margin Fixed expenses $ 1,610,000 551,400 Net operating income (loss) 1,058,600 1,164,000 $ (105,400) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following Information: Sales East $410,000 Division Central $ 670,000 West $530,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 22% 36% $ 278,000 $ 326,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-8. The Marketing Department has proposed increasing the West Division's monthly advertising by $27,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much…
Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total $500,000 $400,000 $100,000 $1,000,000 200,000 300,000 70,000 570,000 Sales Variable costs Fixed costs 50,000 250,000 Operating income (loss) $100,000 $100,000 $-20,000 $180,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued? Select one: a. $380,000 b. $367,650 X c. $160,000 d. $220,000 100,000 100,000
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