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: Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 1,601,000 530,090 1,070,910. 1,178,000 $ (107,090) Required 1 Required 2A Required 2B East $ 401,000 49% Sales Variable expenses Contribution margin Traceable fixed expenses Gross margin $ 293,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-a. The Marketing Department belleves increasing the West Division's monthly advertising by $30,000 will increase that division's sales by 14% 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? Complete this question by entering your answers in the tabs below. Prepare a contribution format income statement segmented by divisions. Total Company 0 Division. Central $ 680,000 20% $ 335,000 0 $ East 0 Division Central 0 $ Required 2A > West $ 520,000 38% $ 203,000 0 0 $ West 0 0
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: Sales Variable expenses as a percentage of sales Traceable fixed expenses $ 1,601,000 530,090 1,070,910. 1,178,000 $ (107,090) Required 1 Required 2A Required 2B East $ 401,000 49% Sales Variable expenses Contribution margin Traceable fixed expenses Gross margin $ 293,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-a. The Marketing Department belleves increasing the West Division's monthly advertising by $30,000 will increase that division's sales by 14% 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? Complete this question by entering your answers in the tabs below. Prepare a contribution format income statement segmented by divisions. Total Company 0 Division. Central $ 680,000 20% $ 335,000 0 $ East 0 Division Central 0 $ Required 2A > West $ 520,000 38% $ 203,000 0 0 $ West 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
$ 1,601,000
530,098
1,070,910
1,178,000
$ (107,090)
Required 1 Required 2A Required 2B
East
$ 401,000
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
Gross margin
49%
$ 293,000
Complete this question by entering your answers in the tabs below.
Prepare a contribution format income statement segmented by divisions.
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 $30,000 will increase that division's
sales by 14% 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?
Total Company
$
10
0
Division
Central
$ 680,000
20%
$ 335,000
0
$
East
0
0
Required 2A >
Division
Central
West
$ 520,000
$
$ 203,000
38%
0
O
West
0
0
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