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 $ 1,576,000 Variable expenses Contribution margin 661,880 914, 120 Fixed expenses 1,006,000 Net operating income (loss) $ (91,880) 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: East Division Central $ 620,000 37% Sales $ 426,000 53% West $ 530,000 39% Variable expenses as a percentage of sales Traceable fixed expenses $ 253,000 $ 327,000 $ 200,000 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 $26,000 based on the belief that it would increase that division's sales by 19%. 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? 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 $ 1,576,000 Variable expenses Contribution margin 661,880 914, 120 Fixed expenses 1,006,000 Net operating income (loss) $ (91,880) 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: East Division Central $ 620,000 37% Sales $ 426,000 53% West $ 530,000 39% Variable expenses as a percentage of sales Traceable fixed expenses $ 253,000 $ 327,000 $ 200,000 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 $26,000 based on the belief that it would increase that division's sales by 19%. 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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Answer rating: 100% (QA)
H5C Home F12 A Cin Insert Page Layout Review fx B 16 1 Totals 1576000 17 Sales 426000 18 Variable ma... View the full answer
Related Book For
Managerial Accounting
ISBN: 9781260247787
17th Edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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