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, which follows:

Sales	$	1,582,000
Variable expenses		741,200
Contribution margin		840,800
Fixed expenses		925,000
Net operating income (loss)	$	(84,200	)

In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:

	Division
	East			Central			West
Sales	$	432,000		$	650,000		$	500,000
Variable expenses as a percentage of sales		60	%		38	%		47	%
Traceable fixed expenses	$	252,000		$	327,000		$	205,000

Required:

1. Prepare a contribution format income statement segmented by divisions, as desired by the president.

2-a. As a result of a marketing study, the president believes that sales in the West Division could be increased by 17% if monthly advertising in that division were increased by $28,000. Calculate the incremental net operating income.

2-b. Would you recommend the increased advertising?

	Yes
	No