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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) $ 1,564,000 468,860 1,095, 140 1,205,000 $ (109,860) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Division East Central West Sales $354,000 $620,000 $599,000 Variable expenses as a percentage of sales 444 214 314 Traceable fixed expenses $250,000 $325,000 $199,088 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-1. The Marketing Department has proposed increasing the West Division's monthly advertising by $28,000 based on the belief that it would increase that division's sales by 14%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented? 2-6. Would you recommend the increased advertising
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