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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,646,000 633,380 1,012,620 1,114,000 $ (101,380) 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: Sales East $ 426,000 Variable expenses as a percentage of sales Traceable fixed expenses Division Central $ 640,000 West $ 580,000 53% 22% 46% $ 268,000 $ 331,000 $ 200,000 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 $27,000 will increase that division's sales by 19%. 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. Required 1 Required 2A Required 2B Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West
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