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 $8,000,000 2,200,000 1,097,500 $4,702,500 155,000 2,936,000 $1,611,500 Magazine Division $3,384,600 1,096,700 1,251,500 $ 1,036,400 Complete this question by entering your answers in the tabs below. 227,300 1,200, 200 $ (391,100) Total $ 11,384,600 3,296,700 2,349,000 $5,738,900 382,300 4,136,200 $1,220,400 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: 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?
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 $8,000,000 2,200,000 1,097,500 $4,702,500 155,000 2,936,000 $1,611,500 Magazine Division $3,384,600 1,096,700 1,251,500 $ 1,036,400 Complete this question by entering your answers in the tabs below. 227,300 1,200, 200 $ (391,100) Total $ 11,384,600 3,296,700 2,349,000 $5,738,900 382,300 4,136,200 $1,220,400 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: 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?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 41P: Shannon, Inc., has two divisions. One produces and sells paper party supplies (napkins, paper...
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