E7-12 (Static) Analyzing Keep-or-Drop Decision (LO 7-2, 7-5) 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 $ 7,800,000 Magazine Division $ 3,300,000 Total $11,100,000 Sales Revenue Cost of Goods sold Variable costs Fixed costs Gross Profit Operating Expenses Variable Fixed Net income 2,000,000 1,077,500 $ 4,722,500 997,000 1,200,000 $ 1,103,000 2,997,000 2,277,500 $ 5,825,500 135,000 2,916,000 $ 1,671,500 198,000 1,199,000 $ (284,000) 333,000 4,105,000 $ 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 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. 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Present the financial information in the form of a segmented income statement (using the contribution margin approach). Book Division Magazine Total Division Variable costs Direct fixed costs Common fixed costs Net income (loss) Required 1 Required 2 > Required: 1. Present the financial information in the form fa segmented income statement (using the contribution margin approach). 2. What will be the impact on net income if the Magazine Division is eliminated? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What will be the impact on net income if the Magazine Division is eliminated? Impact on net income