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: $1,632,000 Variable expenses: $665,200 Contribution margin: $966,800 Fixed expenses: $1,063,000 Net operating income (loss): $(96,200)

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	$442,000	$640,000	$550,000
Variable Expenses as a percentage of sales	55%	29%	43%
Traceable fixed Expenses	$260,000	$321,000	$203,000

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 $26,000 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 increased advertising?