Exercise $6-11($Algo$)$ Segmented Income Statement $[$LO$6-4]$

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement:

Sales $ $1,664,000$

Variable expenses $661,420$

Contribution margin $1,002,580$

Fixed expenses $1,103,000$

Net operating income $($loss$)$ $ $(100,420)$

In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the Accounting Department provided the following information:

Division

East Central West

Sales $ $414,000$ $ $680,000$ $ $570,000$

Variable expenses as a percentage of sales $48\%32\%43\%$

Traceable fixed expenses $ $258,000$ $ $331,000$ $ $207,000$

Required:

$1.$ Prepare a contribution format income statement segmented by divisions.

$2-$a$.$ The Marketing Department believes increasing the West Division's monthly advertising by $$23,000$ will increase that division's sales by $17\%.$ Assuming these estimates are accurate, how much would the company's net operating income increase $($decrease$)$ if the proposal is implemented?

$2-$b$.$ Would you recommend the increased advertising?$$23,000$ will increase that division's sales by $17\%.$ Assuming these estimates are accurate, how

much would the company's net operating income increase $($decrease$)$ if the proposal is

implemented?

$2-$b$.$ Would you recommend the increased advertising?

Complete this question by entering your answers in the tabs below.

Required $1$

Required $2$B

Prepare a contribution format income statement segmented by divisions.