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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mos 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 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 $ 1,576,000 606,140 969,860 1,067,000 $ (97,140) East $ 416,000 $ 273,000 44% Reg 2A 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 $22,000 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. Rea 1 Reg 28 Prepare a contribution format income statement segmented by divisions. Division Central $ 650,000 29% $ 323,000 Total Company East West $ 510,000 46% $191,000 Division Central West

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mos 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 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 $ 1,576,000 606,140 969,860 1,067,000 $ (97,140) East $ 416,000 $ 273,000 44% Reg 2A 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 $22,000 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. Rea 1 Reg 28 Prepare a contribution format income statement segmented by divisions. Division Central $ 650,000 29% $ 323,000 Total Company East West $ 510,000 46% $191,000 Division Central West

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mos 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 would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable exp ses as a percentage of sales Traceable fixed expenses $ 1,576,000 606,140 969,860 1,067,000 $ (97,140) East $ 416,000 44% $ 273,000 Reg 2A Complete this question by entering your answers in the tabs below. Rea 1 Prepare a contribution format income statement segmented by divisions. Req 28 Division Central $ 650,000 $ 323,000 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 $22,000 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? 298 Total Company East West $ 510,000 46% $191,000 Division Central West
Transcribed Image Text:Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mos 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 would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following information: Sales Variable exp ses as a percentage of sales Traceable fixed expenses $ 1,576,000 606,140 969,860 1,067,000 $ (97,140) East $ 416,000 44% $ 273,000 Reg 2A Complete this question by entering your answers in the tabs below. Rea 1 Prepare a contribution format income statement segmented by divisions. Req 28 Division Central $ 650,000 $ 323,000 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 $22,000 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? 298 Total Company East West $ 510,000 46% $191,000 Division Central West
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