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: Sales Revenue Cost of Goods sold: Variable costs Fixed costs Book Division $ 7,800,000 2,000,000 1,077,500 $4,722,500 Magazine Division $ 3,300,000 Total $11,100,000 997,000 1,200,000 Gross Profit $ 1,103,000 Operating Expenses Variable 135,000 2,916,000 $ 1,671,500 Fixed Net income 198,000 1,189,000 2,997,000 2,277,500 $ 5,825,500 333,000 4,105,000 $ (284,000) $ 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? Complete this question by entering your answers in the tabs below. Required 1 Required 2