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 $2,110,000 Variable expenses Contribution margin Fixed expenses Operating loss 915,180 1,194,820 1,327,000 $ (132,180) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses South Geographic Market Central North $611,000 $810,000 $689,000 60% 32% 42% $320,000 $531,000 $311,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. Geographic Market Total South Central North Company Sales Variable expenses $ 2,110,000 $ 611,000 $ 810,000 $ 689,000 915,180 366,600 259,200 289,380 Contribution margin $ 1,194,820 244,400 550,800 399,620 Traceable fixed expenses 1,162,000 320,000 531,000 311,000 Geographic market segment margin $ Common fixed expenses not traceable to geographic markets Operating loss 32,820 $ (75,600) $ 165,000 19,800 $ 88,620 $ (132,180) 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising is increased by $36,000. Calculate the incremental net operating income. Incremental net operating income $ 46,620 2-b. Would you recommend the increased advertising? Yes No