2 E7-12 (Algo) Analyzing Keep-or-Drop Decision (LO 7-2, 7-5) 2. points 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: eBook Book Division $ 8,120,000 Magazine Division $ 3,435,400 Total $ 11,555,400 Print References Sales Revenue Cost of Goods sold Variable costs Fixed costs Gross Profit Operating Expenses Variable Fixed Net income 2,320,000 1,109,500 $ 4,690,500 1,156,500 1,282,400 996,500 3,476,500 2,391,900 $ 5,687,000 $ 167,000 2,948,000 $ 1,575,500 244,900 1,206,900 (455,300) 411,900 4,154,900 1,120, 200 $ 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 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? Required 1 Required 2 Present the financial information in the form of a segmented income statement (using the contribution margin approach). Book Division Magazine Division Total Sales revenue Variable costs Cost of goods sold Operating expenses Direct fixed costs Common fixed costs Net income (loss) Required 1 Required 2 What will be the impact on net income if the Magazine Division is eliminated? Impact on net income