1) Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $23,490 and variable expenses of $7,047. Product Y45E had sales of $34,800 and variable expenses of $13,920. The fixed expenses of the entire company were $15,200. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

Multiple Choice

• would decrease.
• would increase.
• could increase or decrease.
• would not change.

2) Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement:

Sales $ 1,578,000 Variable expenses 745,340 Contribution margin 832,660 Fixed expenses 916,000 Net operating income (loss) $ (83,340)

In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:

Division East Central West Sales $ 448,000 $ 620,000 $ 510,000 Variable expenses as a percentage of sales 58% 38% 49% Traceable fixed expenses $ 268,000 $ 336,000 $ 207,000

Required:

1. Prepare a contribution format income statement segmented by divisions.

2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $21,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?

2-b. Would you recommend the increased advertising?

Req 1 Req 2A Req 2B Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0