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

Sales	$	2,100,000
Variable expenses		868,900
Contribution margin		1,231,100
Fixed expenses		1,325,000
Operating loss	$	(93,900	)

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:

	Geographic Market
	South			Central			North
Sales	$	610,000		$	809,000		$	681,000
Variable expenses as a percentage of sales		58	%		30	%		40	%
Traceable fixed expenses	$	330,000		$	540,000		$	310,000

Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president.

2-a. The companys sales manager believes that sales in the Central geographic market could be increased by 10% if monthly advertising is increased by $35,000. Calculate the incremental net operating income.

2-b. Would you recommend the increased advertising?