Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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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 statement: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) $ 1,548,000 617,740 930,260 1,023,000 $ (92,740) 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: East Sales $ 358,000 Division Central $640,000 West $ 550,000 Variable expenses as a percentage of sales 481 31% 45% $ 295,000 $ 332,000 $ 202,000 Traceable fixed expenses 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 $24,000 based on the belief that it would increase that division's sales by 18%. 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? Complete this question by entering your answers in the tabs below. 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 Variable expenses Fixed expenses Contribution margin Net operating income (loss) $ 1,548,000 617,740 930,260 1,023,000 $ (92,740) 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: East Sales $ 358,000 Division Central $640,000 West $ 550,000 Variable expenses as a percentage of sales 481 31% 45% $ 295,000 $ 332,000 $ 202,000 Traceable fixed expenses 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 $24,000 based on the belief that it would increase that division's sales by 18%. 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? Complete this question by entering your answers in the tabs below.
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