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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, which follows: $ 1,630,000 623,200 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) 1,006,800 1,107,000 $ (100,200) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $430,000 57% $254,000 Division Central $670,000 24% $338,000 West $530,000 41% $191,000 Required: 1. Prepare a contribution format income statement segmented by divisions, as desired by the president. Division Central Total Company East West 2-a. As a result of a marketing study, the president believes that sales in the West Division could be increased by 16% if monthly advertising in that division were increased by $26,000. Calculate the incremental net operating income. Incremental net operating income
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