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.

$2-$a$.$ The Marketing Department has proposed increasing the West Division's monthly advertising by $$15,000$ based on the belief that it would increase that division's sales by $20\%.$ 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?