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, which follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $1,571,000 652.890 918,110 1,010,000 $ (91,890) In an effort to isolate the problem, the president has asked for 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 $421,000 49 % $285,000 Division Central $620,000 31 % $332,000 West $530,000 48 % $195,000 Required: 1. Prepare a contribution format income statement segmented by divisions, as desired by the president. Total Company Division Central East West ol 0 Sales Variable expenses Contribution margin _ Traceable fixed expenses Divisional segment margin Common fixed expenses not traceable to divisions Net operating loss 0 $ 0 $ 0 $ 0 $ 0 2-a. As a result of a marketing study, the president believes that sales in the West Division could be increased by 18% if monthly advertising in that division were increased by $27,000. Calculate the incremental net operating income. Incremental net operating income 2-b. Would you recommend the increased advertising? No Yes