Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its 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, Accounting Department has developed the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses Req 1 $ 1,670,000 607,900 1,062,100 1,168,000 $ (105,900) Complete this question by entering your answers in the tabs below. Req 2A Req 2B East $ 430,000 49% $ 270,000 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 $27,000 based on the belief would increase that division's sales by 11%. 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 1 Prepare a contribution format income statement segmented by divisions. Total Company East Division Central $ 680,000 23% $ 325,000 Req 2A > West $ 560,000 $ 201,000 Division Central 43% West
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its 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, Accounting Department has developed the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses Req 1 $ 1,670,000 607,900 1,062,100 1,168,000 $ (105,900) Complete this question by entering your answers in the tabs below. Req 2A Req 2B East $ 430,000 49% $ 270,000 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 $27,000 based on the belief would increase that division's sales by 11%. 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 1 Prepare a contribution format income statement segmented by divisions. Total Company East Division Central $ 680,000 23% $ 325,000 Req 2A > West $ 560,000 $ 201,000 Division Central 43% West
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
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,
Accounting Department has developed the following information:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
Req 1
$ 1,670,000
607,900
1,062,100
1,168,000
$ (105,900)
Complete this question by entering your answers in the tabs below.
Req 2A
Req 2B
East
$ 430,000
49%
$ 270,000
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 $27,000 based on the belief
would increase that division's sales by 11%. 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 1
Prepare a contribution format income statement segmented by divisions.
Total Company East
Division
Central
$ 680,000
23%
$ 325,000
Req 2A >
West
$ 560,000
$ 201,000
Division
Central
43%
West
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