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

$

1,632,000

Variable expenses

636,400

Contribution margin

995,600

Fixed expenses

1,095,000

Net operating income (loss)

$

(99,400)

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

$

402,000

$

700,000

$

530,000

Variable expenses as a percentage of sales

45

%

31

%

45

%

Traceable fixed expenses

$

273,000

$

322,000

$

209,000

1.

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

2-a.	As a result of a marketing study, the president believes that sales in the West Division could be increased by 15% if monthly advertising in that division were increased by $23,000. Calculate the incremental net operating income.