Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement:
Sales $
Variable expenses
Contribution margin
Fixed expenses
Net operating income loss $
In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the Accounting Department provided the following information:
Division
East Central West
Sales $ $ $
Variable expenses as a percentage of sales
Traceable fixed expenses $ $ $
Required:
Prepare a contribution format income statement segmented by divisions.
a The Marketing Department believes increasing the West Division's monthly advertising by $ will increase that division's sales by Assuming these estimates are accurate, how much would the company's net operating income increase decrease if the proposal is implemented?
b Would you recommend the increased advertising?
