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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
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 Contribution margin Fixed expenses Net operating income (loss) $ 1,618,000 603,340 1,014,660 1,116,000 $ (101,340) 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 $ 680,000 West $ 580,000 Variable expenses as a percentage of sales Traceable fixed expenses 53% 25% 42% $ 262,000 $ 332,000 $ 194,000 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 $21,000 based on the belief that it would increase that division's sales by 17%. 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. Req 1 Req 2A Req 28 Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West
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