Question
ch 6 exer 7 Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent
ch 6 exer 7
| Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows: |
| Sales | $ | 1,618,000 |
| Variable expenses | 696,180 | |
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| Contribution margin | 921,820 | |
| Fixed expenses | 1,014,000 | |
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| Net operating income (loss) | $ | (92,180) |
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| In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: |
| Division | |||||||||
| East | Central | West | |||||||
| Sales | $ | 408,000 | $ | 620,000 | $ | 590,000 | |||
| Variable expenses as a percentage of sales | 51 | % | 34 | % | 47 | % | |||
| Traceable fixed expenses | $ | 251,000 | $ | 321,000 | $ | 201,000 | |||
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| Required: |
| a. | Prepare a contribution format income statement segmented by divisions, as desired by the president. | |||||||||||||||||||||||||||||||||||||||||||||||
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b
| As a result of a marketing study, the president believes that sales in the West Division could be increased by 19% if monthly advertising in that division were increased by $25,000. Calculate the incremental net operating income. |
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Fundamentals Of Oil And Gas Accounting
Authors: Charlotte J. Wright, Rebecca A. Gallun
5th Edition
1593701373, 978-1593701376
