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 $ 1,590,000

Variable expenses 589,600

Contribution margin 1,000,400

Fixed expenses 1,100,000

Net operating income (loss) $ (99,600)

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

$ 410,000 $ 640,000 $ 540,000

Variable expenses as a percentage of sales

46% 23% 47%

Traceable fixed expenses

$ 285,000 $ 332,000 $ 192,000 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 $21,000 based on the belief that it would increase that division's sales by 16%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease) if the proposal is implemented?

2-b. Would you recommend the increased advertising?