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 $1, 000, 000 Variable expenses 396, 000 Contribution 604, 000 margin Fixed expenses 652, 000 Operating loss $ 48, 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: Geographic Market South Central North Sales $300, 000 $400, 000 $300, 000 Variable expenses as a 52% 30% 40% percentage of sales Traceable fixed expenses $160, 000 $265, 000 $150, 000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. Geographic Market Total South Company Central North Sales Variable expenses Contribution margin Traceable fixed expenses Geographic market segment loss Common fixed expenses not traceable to geographic markets Operating loss 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 $13,000. Calculate the incremental net operating income. Incremental net operating income 2-b. Would you recommend the increased advertising? Yes No