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

Sales	$ 1,606,000
Variable expenses	608,520
Contribution margin	997,480
Fixed expenses	1,097,000
Net operating income (loss)	$ (99,520)

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	$ 416,000	$ 650,000	$ 540,000
Variable expenses as a percentage of sales	47%	22%	50%
Traceable fixed expenses	$ 270,000	$ 338,000	$ 196,000

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 $26,000 will increase that division's sales by 16%. 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?