Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...

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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 $ 1,671,000 Variable expenses Contribution margin 567,780 1,103,220 1,214,000 Fixed expenses Net operating income (loss) $ (110,780) 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: West East $ 411,000 Division Central $ 680,000 22% Sales $ 580,000 31% Variable expenses as a percentage of sales Traceable fixed expenses $ 278,000 $325,000 $ 201,000 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 11%. 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? 58% 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 $ 1,671,000 Variable expenses Contribution margin 567,780 1,103,220 1,214,000 Fixed expenses Net operating income (loss) $ (110,780) 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: West East $ 411,000 Division Central $ 680,000 22% Sales $ 580,000 31% Variable expenses as a percentage of sales Traceable fixed expenses $ 278,000 $325,000 $ 201,000 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 11%. 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? 58%

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Solution 1 Wingate Company Contribution format income statement East Central ... View the full answer