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:

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

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:

	Geographic Market
	South			Central			North
Sales	$	400,000		$	600,000		$	500,000
Variable expenses as a percentage of sales		52	%		30	%		40	%
Traceable fixed expenses	$	240,000		$	330,000		$	200,000

Required:

1.	Prepare a contribution format income statement segmented by geographic market, as desired by the president. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.)

		Geographic Market
	Total Company	South	Central	North
	$	$	$	$
		$	$	$
	$

2a.	The company%u2019s sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000. Calculate the incremental net operating income. (Omit the "$" sign in your response.)

Incremental net operating income

$

2b.

Would you recommend the increased advertising?

	Yes
	No