Sales Variable costs Contribution margin Fixed costs traceable to divisions Division responsibility margin Common fixed costs Income from operations Butterfield, Inc Dollars $ 500,000 252,000 100.00% $340,000 Investment Centers Division 1 Division 2 % Dollars Dollars % 100% $ 160,000 100% 50.40 60 40% $112,000 48,000 30 70% 71,400 21 76,800 48 $ 99,800 40,000 $ 59,800 19.96% $ 64,600 19% $ 35,200 22% 8.00 11.96% $ 248,000 148,200 204,000 49.60% $136,000 29.64 Profit Centers Division 1 Product A Product B Dollars 100% $136,000 60 % Dollars 100.00% $204,000 100.00% $ 88,400 23,800 $ 64,600 61,200 40% $ 74,800 14 14,280 26% $ 60,520 7 19% 45.00 55.00% $ 61,200 10.50 33,320 44.50% $ 27,880 142,800 70.00 30.00% 16.33 13.67% Sales Variable costs Contribution margin Fixed costs traceable to products Product responsibility margin Common fixed costs Responsibility margin for division Dollars $340,000 204,000 $ 136,000 47,600 Required: a. The company plans to initiate an advertising campaign for one of the two products in Division 1. The campaign would cost $3,000 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, Inc., by division, under the assumption that in April the monthly sales in Division 2 increase to $180,000.