10.25 (LO 2) Excel Segment margin income statement Jim Coston was reviewing the latest income statement for Trenton Communications. For the second year in a row, the Audio division was showing a negative segment margin, and Jim thought it was time to close the division to increase the company's operating income. The income statement that he examined follows. Video Audio Total Division Division Sales revenue $5-300,000 $2,860,000 $8,160,000 Less variable 3.650,000 1,645,000 5,295,000 expenses Contribution 1,650,000 1,215,000 2,865,000 margin Less traceable 943.000 1.275.000 2,218,000 fixed expenses Segment $ 707,000 $ (60,000) 647,000 margin Common 555-000 fixed costs Net operating $ 92,000 income When Jim broke the news, Chloe Sams, manager of the Audio division, was upset. Chloe thought that Jim could be making a decision too quickly, and suggested that he look at the division's detailed operating results. The Audio division is composed of two groups, Streaming and CD. Streaming accounts for 75% of the division's sales and contribution margin; CD accounts for the other 25%. Streaming's traceable fixed costs are $450,000; CD, $350,000. Required a. Prepare a segment margin income statement for the Audio division that shows the segment margin of each group. b. Should Jim Coston close the Audio Division? Why or why not