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For the first part I've attached the format Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown
For the first part I've attached the format
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 Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,630,000 608,500 1,021,500 1,124,000 $ (102,500) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $360,000 56% $275,000 Division Central $ 700,000 28% $321,000 West $570,000 37% $ 193,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $27,000 based on the belief that it would increase that division's sales by 14%. 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? Prepare a contribution format income statement segmented by divisions. Division Total Company East Central WestStep by Step Solution
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