Exercise $7-11($Algo$)$ Segmented Income Statement $[$LO$7-4]$

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 $ $1,492,000$

Variable expenses $570,280$

Contribution margin $921,720$

Fixed expenses $1,014,000$

Net operating income $($loss$)$ $ $(92,280)$

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 $ $372,000$ $ $600,000$ $ $520,000$

Variable expenses as a percentage of sales $59\%29\%34\%$

Traceable fixed expenses $ $292,000$ $ $333,000$ $ $209,000$

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 $$28,000$ 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?