Shown as follows are responsibility income statements for Butterfield, Inc., for the month of March.

	Investment Centers
	Butterfield, Inc						Division 1						Division 2
	Dollars			%			Dollars			%			Dollars			%
Sales	$	380,000		100.00	%		$	260,000		100	%		$	120,000		100	%
Variable costs		192,000		50.53				156,000		60				36,000		30
Contribution margin	$	188,000		49.47	%		$	104,000		40	%		$	84,000		70	%
Fixed costs traceable to divisions		112,200		29.53				54,600		21				57,600		48
Division responsibility margin	$	75,800		19.95	%		$	49,400		19	%		$	26,400		22	%
Common fixed costs		40,000		10.53
Income from operations	$	35,800		9.42	%

	Profit Centers
	Division 1						Product A						Product B
	Dollars			%			Dollars			%			Dollars			%
Sales	$	260,000		100	%		$	104,000		100.00	%		$	156,000		100.00	%
Variable costs		156,000		60				46,800		45.00				109,200		70.00
Contribution margin	$	104,000		40	%		$	57,200		55.00	%		$	46,800		30.00	%
Fixed costs traceable to products		36,400		14				10,920		10.50				25,480		16.33
Product responsibility margin	$	67,600		26	%		$	46,280		44.50	%		$	21,320		13.67	%
Common fixed costs		18,200		7
Responsibility margin for division	$	49,400		19	%

Required:

a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $5,000 per month and is expected to increase the sales of whichever product is advertised by $40,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised.

e. Prepare an income statement for Butterfield, Inc., by division, under the assumption that in April the monthly sales in Division 2 increase to $140,000.

The company plans to initiate an advertising campaign for one of the two products in Division 1 . The campaign would cost $5,000 per month and is expected to increase the sales of whichever product is advertised by $40,000 per month. Compute the expected increase in the responsibility margin of Division 1 assuming that (1) product A is advertised and (2) product B is advertised. Prepare an income statement for Butterfield, Inc., by division, under the assumption that in April the monthly sales in Division 2 increase to $140,000. (Round your percentage answers to 2 decimal place (i.e. 0.1234 should be considered as 12.34% ).)