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	$	1,559,000
Variable expenses		551,370
Contribution margin		1,007,630
Fixed expenses		1,108,000
Net operating income (loss)	$	(100,370)

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	$	399,000		$	660,000		$	500,000
Variable expenses as a percentage of sales		43	%		28	%		39	%
Traceable fixed expenses	$	284,000		$	333,000		$	195,000

Required:

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

2a.

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 $28,000. Calculate the incremental net operating income. -----------------------------------------------------------------------------------------

9.

Raner, Harris, & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two officesone in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs.

Assume that Minneapolis sales by major market are:

					Market
	Minneapolis				Medical				Dental
Sales	$	450,000	100	%	$	300,000	100	%	$	150,000	100	%
Variable expenses		270,000	60	%		195,000	65	%		75,000	50	%
Contribution margin		180,000	40	%		105,000	35	%		75,000	50	%
Traceable fixed expenses		54,000	12	%		15,000	5	%		39,000	26	%
Market segment margin		126,000	28	%	$	90,000	30	%	$	36,000	24	%
Common fixed expenses not traceable to markets		13,500	3	%
Office segment margin	$	112,500	25	%

The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $6,000. Marketing studies indicate that such a campaign would increase sales in the Medical market by $52,500 or increase sales in the Dental market by $45,000.

Required:

1-a.	Calculate the increased segment margin.

Division Total Company mpany East East Central West 0 $ O $ 0 $