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	$	1,661,000
Variable expenses		739,370
Contribution margin		921,630
Fixed expenses		1,014,000
Net operating income (loss)	$	(92,370)

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:

	Division
	East			Central			West
Sales	$	441,000		$	650,000		$	570,000
Variable expenses as a percentage of sales		57	%		40	%		40	%
Traceable fixed expenses	$	293,000		$	329,000		$	202,000

Required:

1.	Prepare a contribution format income statement segmented by divisions, as desired by the president.

2-a.	As a result of a marketing study, the president believes that sales in the West Division could be increased by 15% if monthly advertising in that division were increased by $23,000. Calculate the incremental net operating income.

2-b.

Would you recommend the increased advertising?

	Yes
	No