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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: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,609,000 625, 220 983, 780 1,082,000 $ (98,220) In an effort to resolve the problem, the company would like to prepare an income statement segmerited by division. Accordingly, the Accounting Department has developed the following information: Division East Central Sales 5419,000 5690,000 $500,000 Variable expenses as a percentage of sales 39% 31% Traceable fixed expenses $269,000 $230,000 $204,000 West Required: 1. Prepare a contribution format income statement segmented by divisions 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $22,000 based on the belief that it would 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
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