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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
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) $ 1,601,000 631,390 969,610 1,067,000 $ (97,390) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $441,000 59% $ 254,000 Division Central $640,000 32% $ 324,000 West $520,000 32% $ 199,000 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 15%. 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 2B Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West 0 0 0 0 0 $ O $ 0 $ 0 $ 0 Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B 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 15%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? (Do not round intermediate calculations.) Net operating income will by Complete this question by entering your answers in the tabs below. Req 1 Req 2A Reg 2B Would you recommend the increased advertising? OYes Ono Required information (The following information applies to the questions displayed below.] Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Year 1 Year 2 Year 3 Inventories Beginning (units) Ending (units) Variable costing net operating income 200 150 $290,000 150 190 $279,000 190 230 $260,000 The company's fixed manufacturing overhead per unit was constant at $500 for all three years. 2. Assume in Year 4 that the company's variable costing net operating income was $250,000 and its absorption costing net operating income was $290,000. a. Did inventories increase or decrease during Year 4? Increase Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Answer is complete but not entirely correct. inventory during $ deferred in Year 4 (40,000) Fixed manufacturing overhead cost x
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