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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:
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 Variable expenses Contribution margin Fixed expenses Operating loss $2,070,000 895,880 1,174,120 1,319,000 $ (144,880) 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 Geographic Market South Central North $607,000 $806,000 $657,000 50% 36% 46% $320,000 $480,000 $307,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. Geographic Market Total Company South Central North Sales Variable expenses Contribution margin $ 0 0 0 0 $ 0 $ 0 $ 0 $ 0 Traceable fixed expenses Geographic market segment margin Common fixed expenses not traceable to geographic markets Operating loss $ 0 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 10% if monthly advertising is increased by $32,000. Calculate the incremental net operating income. Incremental net operating income
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