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 $ 1,553,000

Variable expenses 631,410

Contribution margin 921,590

Fixed expenses 1,014,000

Net operating income (loss) $ (92,410)

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 $ 373,000 $ 650,000 $ 530,000

Variable expenses as a percentage of sales 57% 31% 41%

Traceable fixed expenses $ 294,000 $ 333,000 $ 200,000

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 $23,000 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?