# 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?

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Step 1
1. Segmented Income Statement (using the contribution margin approach):

Out of the total fixed cost (\$4,001,000) allocated to both division, \$2,812,000 related to book division. The rest of allocated fixed costs, i.e. \$4,001,000 - \$2,812,000 = \$1,189,000 is apportioned to Magazine division. Due to lack of information in the sum, it is assumed that all apportioned fixed costs have been added to operating fixed costs in both the divisions. Hence, direct fixed costs (operating) for both division is as follows:

Step 2

Following is the Segmented I...

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