Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, JS SHOWI by its most recent monthly contribution format income statement Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,584,000 524,100 1,059,900 1,166,000 $ (106,100) 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 East $ 414,000 Variable expenses as a percentage of sales Traceable fixed expenses 50% Division Central $ 660,000 21% West $ 510,000 35% $ 288,000 $ 333,000 $194,000 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 $26,000 based on the belief that it would increase that division's sales by 16%. 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?
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, JS SHOWI by its most recent monthly contribution format income statement Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,584,000 524,100 1,059,900 1,166,000 $ (106,100) 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 East $ 414,000 Variable expenses as a percentage of sales Traceable fixed expenses 50% Division Central $ 660,000 21% West $ 510,000 35% $ 288,000 $ 333,000 $194,000 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 $26,000 based on the belief that it would increase that division's sales by 16%. 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
Related questions
Question
Sagar
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)
$ 1,584,000
524,100
1,059,900
1,166,000
$ (106,100)
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
East
$ 414,000
Division
Central
$ 660,000
West
$ 510,000
Variable expenses as a percentage of sales
Traceable fixed expenses
50%
21%
35%
$ 288,000
$ 333,000
$ 194,000
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 $26,000 based on the
belief that it would increase that division's sales by 16%. 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.
Req 1
Req 2A
Req 2B
Prepare a contribution format income statement segmented by divisions.
Division
Total Company East
Central
West
Req 1
Req 2A >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education