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 $24.000 based on the belief that it would increase that division's sales by 10%. 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?
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 $24.000 based on the belief that it would increase that division's sales by 10%. 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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
Transcribed Image Text: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 $24.000 based on the belief that it
would increase that division's sales by 10%. Assuming these estimates are accurate, how much would the company's net operating
Income increase (decrease) if the proposal is implemented?
2b. Would you recommend the increased advertising?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Reg 28

Transcribed Image Text: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:
Şales
Varlable expenses
Contribution margin
Fixed expenses
$ 1,594,000
555,060
1,038,940
1,14), 000
$ (104,060)
Net operating incone (loss)
In an effort to resolve the problem, the company weild like to prepare an Income statement segmented by division. Accordingly, the
Accounting Department has developed the following information:
Division
East
Central
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
374,000
54x
$ 294,000
$650,000
21%
$ 329,000
West
$ 570, 000
38%
$ 203,000
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