Wingate Compa recent monthly Sales Variable exp Contribution Fixer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Req 28
Prepare a contribution format income statement segmented by divisions.
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Divisional segment margin
Common fixed expenses not traceable to divisions
Net operating loss
♥
Reg!
Division
East
Central
$ 440,000
$ 620,000
228,800 223,200
Total
Company
$ 1,600,000
700,400
899,600
211,200 396,800
280,000 320,000
795,000
104,600 $(68,800) $ 76,800
195,000
(90,400)
$
Req 2A >
West
$540,000
248,400
291,600
195,000
$ 96,600

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:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income (loss)
$ 1,600,000
700,400
899,600
990,000
$ (90,400)
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:
Sales
Variable expenses as a percentage of sales.
Traceable fixed expenses
East
$ 440,000
$ 280,000
52%
Division
Central
$ 620,000
$ 320,000
36%
West
$ 540,000
46%
$ 195,000
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 $21,000 based on the belief that it
would increase that division's sales by 15%. 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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