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	$	1,643,000
Variable expenses		520,880
Contribution margin		1,122,120
Fixed expenses		1,234,000
Net operating income (loss)	$	(111,880)

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	$	373,000		$	690,000		$	580,000
Variable expenses as a percentage of sales		56	%		20	%		30	%
Traceable fixed expenses	$	271,000		$	335,000		$	196,000

Required:

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

2-.	As a result of a marketing study, the president believes that sales in the West Division could be increased by 13% if monthly advertising in that division were increased by $21,000. Calculate the incremental net operating income.

2-b.

Would you recommend the increased advertising?

	No
	Yes

Division Total Company East Central West