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:

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 $26,000 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?

Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,680,000 629,000 1,051,000 1,156,000 $ (105,000) Sales Variable expenses as a percentage of sales Traceable fixed expenses East $430,000 45% $297,000 Division Central $680,000 28% $329,000 West $570,000 43% $209,000 Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West 0 0 0 0 0 $ 0 $ 0 $ 0 $ 0 The Marketing Department has proposed increasing the West Division's monthly advertising by $26,000 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? (Do not round intermediate calculations.) Net operating income will by