EXERCISE 6-11 Segmented Income Statement LO6-4 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: Sales $1,000,000 Variable expenses 390,000 Contribution margin 610,000 Fixed expenses 625,000 Net operating income (loss) $ (15,000) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Required: Division East Central West Sales Variable expenses as a percentage of sales Traceable fixed expenses $250,000 $400,000 $350,000 52% 30% 40% $160,000 $200,000 $175,000 1. Prepare a contribution format income statement segmented by divisions. 2. The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 based on the belief that it would increase that division's sales by 20%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?