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:
Only 20 percent of the fixed manufacturing costs and 60 percent of the fixed operating expenses are directly attributable 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 approach).
2. What will be the impact on net income if the Magazine Division is eliminated?
