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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000,000 Variable expenses . . . . . . . . . . . . . . . . . . . . . . . . 390,000 Contribution margin . . . . . . . . . . . . . . . . . . . . . . . 610,000 Fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 625,000 Net operating income (loss) . . . . . . . . . . . . . . . . $ (15,000)

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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250,000 $400,000 $350,000 Variable expenses as a percentage of sales . . . . . . . . . 52% 30% 40% Traceable fixed expenses . . . . . . . . . . . . . . . . . . . . . . . . . $160,000 $200,000 $175,000

Required: 1. Prepare a contribution format income statement segmented by divisions. 2. The Marketing Department has proposed increasing the West Divisions monthly advertising by $15,000 based on the belief that it would increase that divisions sales by 20%. Assuming these estimates are accurate, how much would the companys net operating income increase (decrease) if the proposal is implemented?