Exercise 6-11 (Algo) Segmented Income Statement [LO6-4] 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) $1,688,000 739,880 948, 120 1,043,000 $ (94/880) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 428,000 $ 273,000 61% Division Central $ 660,000 38% $ 335,000 West $ 600,000 $ 194,000 38% Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department believes increasing the West Division's monthly advertising by $20,000 will 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?
Exercise 6-11 (Algo) Segmented Income Statement [LO6-4] 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) $1,688,000 739,880 948, 120 1,043,000 $ (94/880) 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: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 428,000 $ 273,000 61% Division Central $ 660,000 38% $ 335,000 West $ 600,000 $ 194,000 38% Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department believes increasing the West Division's monthly advertising by $20,000 will 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 6-11 (Algo) Segmented Income Statement [LO6-4]
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)
$ 1,688,000
739,880
948, 120
1,043,000
$ (94,880)
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:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
East
$ 428,000
$ 273,000
61%
Division
Central
$ 660,000
38%
$ 335,000
West
$ 600,000
$ 194,000
38%
Required:
1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department believes increasing the West Division's monthly advertising by $20,000 will 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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9e3d82e-ae00-4f0e-b1fc-73966dfb30c4%2Fe80df4cb-dddc-4384-9390-45fbae57bf71%2Fqk2f0j8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 6-11 (Algo) Segmented Income Statement [LO6-4]
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)
$ 1,688,000
739,880
948, 120
1,043,000
$ (94,880)
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:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
East
$ 428,000
$ 273,000
61%
Division
Central
$ 660,000
38%
$ 335,000
West
$ 600,000
$ 194,000
38%
Required:
1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department believes increasing the West Division's monthly advertising by $20,000 will 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?
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