Exercise 6-11 (Algo) Segmented Income Statement [LO6-4] Wingate Company, a wholesale distributor of electronic equipment, has...
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Exercise 6-11 (Algo) Segmented Income Statement [LO6-4] Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,539,000 597,930 941,070 1,035,000 $ (93,930) 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: East Sales $ 409,000 Division Central $ 600,000 West $ 530,000 Variable expenses as a percentage of sales Traceable fixed expenses 57% 29% 36% $ 265,000 $ 329,000 $ 196,000 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 $29,000 will increase that division's sales by 12%. 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. Exercise 6-11 (Algo) Segmented Income Statement [LO6-4] Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,539,000 597,930 941,070 1,035,000 $ (93,930) 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: East Sales $ 409,000 Division Central $ 600,000 West $ 530,000 Variable expenses as a percentage of sales Traceable fixed expenses 57% 29% 36% $ 265,000 $ 329,000 $ 196,000 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 $29,000 will increase that division's sales by 12%. 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.
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Answer rating: 100% (QA)
Analysis 1 East Division Sales 409000 Variable Expenses 60 of sales 06 409000 245400 Contribution Margin Sales Variable Expenses 409000 245400 163600 ... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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