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 $
Variable expenses
Contribution margin
Fixed expenses
Net operating income loss $
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:
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 has proposed increasing the West Division's monthly advertising by $ based on the belief that it would 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?
