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 $ 1,618,000 Variable expenses 586,180 Contribution margin 1,031,820 Fixed expenses 1,135,000 Net operating income (loss) $ (103,180) 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 $ 358,000 $ 690,000 $ 570,000 Variable expenses as a percentage of sales 46% 33% 34% Traceable fixed expenses $ 254,000 $ 340,000 $ 191,000 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 $23,000 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?