Business
Business, 28.02.2020 19:55, laurieburgess804

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 $ 1,608,000 Variable expenses 568,000 Contribution margin 1,040,000 Fixed expenses 1,144,000 Net operating income (loss) $ (104,000) 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 $ 378,000 $ 640,000 $ 590,000 Variable expenses as a percentage of sales 55 % 24 % 35 % Traceable fixed expenses $ 255,000 $ 325,000 $ 196,000 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 $23,000 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?

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