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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown recent monthly contribution format income statement: Sales Variable
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,590,000 659,800 930,200 1,023,000 $ (92,800) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accor Accounting Department has developed the following information: Division Central $630,000 348 $340,000 East $440,000 548 $ 258,000 Sales Variable expenses as a percentage of sales Traceable fixed expenses West $520,000 408 $206,000 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 $29,000 based on the would increase that division's sales by 10%. Assuming these estimates are accurate, how much would the company's net income increase (decrease) if the proposal is implemented? 2-b. Would you recommend the increased advertising? Division Total Company East Central West 0 0 0 0 Sales Variable expenses Contribution margin Traceable fixed expenses Divisional segment margin Fixed manufacturing overhead Net operating loss 0 $ 0 $ 0 $ 0 The Marketing Department has proposed increasing the West Division's monthly advertising by $29,000 based on the belief that it would increase that division's sales by 10%. 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 Would you recommend the increased advertising? Yes ONO
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