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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: $ 1,663,000 598,310 1,064,690 1,171,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ (106,310) 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: Division East Central West $433,000 47% $660,000 27% $570,000 38% Sales Variable expenses as a percentage of sales Traceable fixed expenses $265,000 $321,000 $204,000 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 $21,000 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?

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: $ 1,663,000 598,310 1,064,690 1,171,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ (106,310) 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: Division East Central West $433,000 47% $660,000 27% $570,000 38% Sales Variable expenses as a percentage of sales Traceable fixed expenses $265,000 $321,000 $204,000 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 $21,000 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?

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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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 2A > < Prev 4 of 4 Next .. Desktop search
Transcribed Image Text: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 2A > < Prev 4 of 4 Next .. Desktop search
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: $ 1,663,000 598,310 Sales Variable expenses Contribution margin Fixed expenses 1,064,690 1,171,000 $ (106,310) 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: Division Central $660,000 27% East West $433,000 47% $570,000 38% Sales Variable expenses as a percentage of sales Traceable fixed expenses $265,000 $321,000 $204,000 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 $21,000 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? < Prev 4 of 4 Next Desktop o search
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: $ 1,663,000 598,310 Sales Variable expenses Contribution margin Fixed expenses 1,064,690 1,171,000 $ (106,310) 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: Division Central $660,000 27% East West $433,000 47% $570,000 38% Sales Variable expenses as a percentage of sales Traceable fixed expenses $265,000 $321,000 $204,000 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 $21,000 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? < Prev 4 of 4 Next Desktop o search
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