Problem $22\mathrm{.}5$A $($Algo$)$ Analysis of Responsibility Income Statements $($LO$22-3,$ LO$22-4,$ LO$22-5)$

Shown as follows are responsibility income statements for Butterfield, Incorporated, for the month of March:

$$Investment CentersButterfield, IncorporatedDivision $1$Division $2$Dollars$\%$Dollars$\%$Dollars$\%$Sales$ $450,000100\mathrm{.}00\%$$ $270,000100\%$$ $180,000100\%$Variable costs$216,00048\mathrm{.}00162,0006054,00030$Contribution margin$ $234,00052\mathrm{.}00\%$$ $108,00040\%$$ $126,00070\%$Fixed costs traceable to divisions$143,10031\mathrm{.}8056,7002186,40048$Division responsibility margin$ $90,90020\mathrm{.}20\%$$ $51,30019\%$$ $39,60022\%$Common fixed costs$50,00011\mathrm{.}11$Income from operations$ $40,9009\mathrm{.}09\%$

$$Profit CentersDivision $1$Product AProduct BDollars$\%$Dollars$\%$Dollars$\%$Sales$ $270,000100\%$$ $108,000100\mathrm{.}00\%$$ $162,000100\mathrm{.}00\%$Variable costs$162,0006048,60045\mathrm{.}00113,40070\mathrm{.}00$Contribution margin$ $108,00040\%$$ $59,40055\mathrm{.}00\%$$ $48,60030\mathrm{.}00\%$Fixed costs traceable to products$37,8001411,34010\mathrm{.}5026,46016\mathrm{.}33$Product responsibility margin$ $70,20026\%$$ $48,06044\mathrm{.}50\%$$ $22,14013\mathrm{.}67\%$Common fixed costs$18,9007$Responsibility margin for division$ $51,30019\%$

Required:

a$.$ The company plans to initiate an advertising campaign for one of the two products in Division $1.$ The campaign would cost $$4,000$ per month and is expected to increase the sales of whichever product is advertised by $$40,000$ per month. Compute the expected increase in the responsibility margin of Division $1$ assuming that $(1)$ product A is advertised and $(2)$ product B is advertised.

e$.$ Prepare an income statement for Butterfield, Incorporated, by division, under the assumption that in April the monthly sales in Division $2$ increase to $$200,000.$