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 $ 1,546,000

Variable expenses 511,720

Contribution margin 1,034,280

Fixed expenses 1,138,000

Net operating income (loss) $ (103,720)

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	$ 356,000	$ 690,000	$ 500,000
Variable expenses as a percentage of sales	47%	26%	33%
Traceable fixed expenses	$ 257,000	$ 322,000	$ 204,000

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 $22,000 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?