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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
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 Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,569,000 636,010 932,990 1,026,000 (93,010) 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 Central Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 369,000 49 % $ 269,000 $ 640,000 30 % $ 337,000 West $ 560,000 47 % $ 196,000 Required: 1. Prepare a contribution format income statement segmented by divisions, as desired by the president. Division Central Total Company East West 2-a. As a result of a marketing study, the president believes that sales in the West Division could be increased by 16% if monthly advertising in that division were increased by $26,000. Calculate the incremental net operating income. Incremental net operating income
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