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 $1,658,000 Variable expenses 649,320 Contribution margin 1,008,680 Fixed expenses 1,110,000 Net operating income (loss) $ (101,320) 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, and West Sales$448,000, $670,000, $540,000 Variable expenses as a percentage of sales 44%, 28%, 49% Traceable fixed expenses $263,000, $332,000, $202,000

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 $27,000 based on the belief that it would increase that division's sales by 18%. 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?