Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement:

Sales	$ 1,554,000
Variable expenses	557,660
Contribution margin	996,340
Fixed expenses	1,096,000
Net operating income (loss)	$ (99,660)

In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the Accounting Department provided the following information:

	Division
East	Central	West
Sales	$ 404,000	$ 650,000	$ 500,000
Variable expenses as a percentage of sales	54%	23%	38%
Traceable fixed expenses	$ 273,000	$ 323,000	$ 195,000

Required:

1. Prepare a contribution format income statement segmented by divisions.

2-a. The Marketing Department believes increasing the West Division's monthly advertising by $23,000 will increase that division's sales by 12%. 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?