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	$	1,675,000
Variable expenses		570,000
Contribution margin		1,105,000
Fixed expenses		1,216,000
Net operating income (loss)	$	(111,000)

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:

	Division
	East			Central			West
Sales	$	415,000		$	670,000		$	590,000
Variable expenses as a percentage of sales		48	%		21	%		39	%
Traceable fixed expenses	$	294,000		$	326,000		$	205,000

Required:

1. Prepare a contribution format income statement segmented by divisions.

		Division
	Total Company	East	Central	West
Sales
Variable expenses
Contribution margin	0	0	0	0
Traceable fixed expenses
Divisional segment margin	0	$0	$0	$0
Common fixed expenses not traceable to divisions
Net operating loss	$0

2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $24,000 based on the belief that it would increase that division's sales by 19%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?

Net operating income will

by

2-b. Would you recommend the increased advertising?

Would you recommend the increased advertising?

	Yesradio button unchecked1 of 2 Noradio button unchecked2 of 2