Segmented Income Statement [LO4]

Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:

In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following data:

Required:
1. Prepare a contribution format income statement segmented by geographic market, as desired by the president.
2. The company’s sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000. Would you recommend the increased advertising? Show computations to support your answer.

Transcribed Image Text:

Sales..... Variable expenses. Contribution margin. Fixed expenses Net operating loss.. $1,500,000 588,000 912,000 945,000 $ (33,000)