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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) $ 1,563,000 577,980 985,020 1,084,000 $ (98,980) 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 $ 363,000 Variable expenses as a percentage of sales Traceable fixed expenses 46% Division Central $ 650,000 26% West $ 550,000 44% $ 251,000 $ 321,000 $191,000 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 18%. 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? Answer is complete but not entirely correct. 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. Req 1 Req 2A Req 2B 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 income + Division Total Company East Central West $ 1,563,000 $650,000 $550,000 $363,000 577,980 299,000X 143,000 159,720x 985,020 351,000 407,000 203,280 763,000 251,000 321,000 191,000 222,020 $ 100,000 $ 86,000 $ 12,280 861,980 X $ (639,960) < Req 1 Req 2A >

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) $ 1,563,000 577,980 985,020 1,084,000 $ (98,980) 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 $ 363,000 Variable expenses as a percentage of sales Traceable fixed expenses 46% Division Central $ 650,000 26% West $ 550,000 44% $ 251,000 $ 321,000 $191,000 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 18%. 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? Answer is complete but not entirely correct. 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. Req 1 Req 2A Req 2B 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 income + Division Total Company East Central West $ 1,563,000 $650,000 $550,000 $363,000 577,980 299,000X 143,000 159,720x 985,020 351,000 407,000 203,280 763,000 251,000 321,000 191,000 222,020 $ 100,000 $ 86,000 $ 12,280 861,980 X $ (639,960) < Req 1 Req 2A >

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 most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,563,000 577,980 985,020 1,084,000 $ (98,980) 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 $ 363,000 Variable expenses as a percentage of sales Traceable fixed expenses 46% Division Central $ 650,000 26% West $ 550,000 44% $ 251,000 $ 321,000 $191,000 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 18%. 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? Answer is complete but not entirely correct. 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.
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) $ 1,563,000 577,980 985,020 1,084,000 $ (98,980) 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 $ 363,000 Variable expenses as a percentage of sales Traceable fixed expenses 46% Division Central $ 650,000 26% West $ 550,000 44% $ 251,000 $ 321,000 $191,000 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 18%. 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? Answer is complete but not entirely correct. 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.
Req 1 Req 2A Req 2B 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 income + Division Total Company East Central West $ 1,563,000 $650,000 $550,000 $363,000 577,980 299,000X 143,000 159,720x 985,020 351,000 407,000 203,280 763,000 251,000 321,000 191,000 222,020 $ 100,000 $ 86,000 $ 12,280 861,980 X $ (639,960) < Req 1 Req 2A >
Transcribed Image Text:Req 1 Req 2A Req 2B 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 income + Division Total Company East Central West $ 1,563,000 $650,000 $550,000 $363,000 577,980 299,000X 143,000 159,720x 985,020 351,000 407,000 203,280 763,000 251,000 321,000 191,000 222,020 $ 100,000 $ 86,000 $ 12,280 861,980 X $ (639,960) < Req 1 Req 2A >
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