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: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:

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:

Required:

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 $18\%.$ 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.

Req $2$A

Req $2$B

Prepare a contribution format income statement segmented by divisions.

Sales $ $1,647,000$

Variable expenses $650,900$

Contribution margin $996,100$

Fixed expenses $1,096,000$

Net operating income $($loss$)$ $ $(99,900)$

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 $ $427,000$ $ $700,000$ $ $520,000$

Variable expenses as a percentage of sales $50\%35\%37\%$

Traceable fixed expenses $ $262,000$ $ $324,000$ $ $203,000$

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 $18\%.$ 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?