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 $ 1,585,000 Variable expenses 520,850 Contribution margin 1,064,150 Fixed expenses 1,171,000 Net operating income (loss) $ (106,850) 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 $ 610,000 $ 560,000 Variable expenses as a percentage of sales 43% 24% 35% Traceable fixed expenses $ 271,000 $ 321,000 $ 193,000

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 $25,000 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? 2-b. Would you recommend the increased advertising?