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
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 | $ | 1,598,000 |
| Variable expenses | | 614,620 |
| Contribution margin | | 983,380 |
| Fixed expenses | | 1,082,000 |
| Net operating income (loss) | $ | (98,620) |
| |
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:
| | Division |
| | East | Central | West |
| Sales | $ | 388,000 | | $ | 680,000 | | $ | 530,000 | |
| Variable expenses as a percentage of sales | | 59 | % | | 31 | % | | 33 | % |
| Traceable fixed expenses | $ | 257,000 | | $ | 337,000 | | $ | 208,000 | |
| |
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 $20,000 based on the belief that it would increase that division's sales by 16%. 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?
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 $20,000 based on the belief that it would increase that division's sales by 16%. 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. Req 1 Req 2A Reg 2B Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West 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 $388,000 59% $257,000 Division Central $ 680,000 31% $337,000 West $530,000 33% $208,000 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 $20,000 based on the belief that it would increase that division's sales by 16%. 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. Req 1 Req 2A Req 2B The Marketing Department has proposed increasing the West Division's monthly advertising by $20,000 based on the belief that it would increase that division's sales by 16%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? (Do not round intermediate calculations.) Net operating income will by Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Selling price per unit Variable expenses per unit Traceable fixed expenses per year Product Weedban Greengrow $ 8.00 $ 35.00 $ 3.00 $ 11.00 $ 137,000 $ 44,000 Last year the company produced and sold 41,000 units of Weedban and 18,000 units of Greengrow. Its annual common fixed expenses are $104,000. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Company Weedban Greengrow
