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) 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 $ 1,461,000 602,830 858,170 944,000 $ (85,830) Req 1 Complete this question by entering your answers in the tabs below. Req 2A East $ 351,000 $ 275,000 Req 2B 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 $29,000 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? 53% Prepare a contribution format income statement segmented by divisions. Division Central $ 610,000 38% $ 333,000 West $ 500,000 37% $ 204,000 Division
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) 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 $ 1,461,000 602,830 858,170 944,000 $ (85,830) Req 1 Complete this question by entering your answers in the tabs below. Req 2A East $ 351,000 $ 275,000 Req 2B 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 $29,000 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? 53% Prepare a contribution format income statement segmented by divisions. Division Central $ 610,000 38% $ 333,000 West $ 500,000 37% $ 204,000 Division
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 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)
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
$ 1,461,000
602,830
858,170
944,000
$ (85,830)
Req 1
Complete this question by entering your answers in the tabs below.
Req 2A
East
$ 351,000
$ 275,000
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 $29,000 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?
Req 2B
53%
Prepare a contribution format income statement segmented by divisions.
Division
Central
$ 610,000
38%
West
$ 500,000
37%
$333,000 $ 204,000
Division
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