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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) $ 1,601,000 607,540 993,460 1,093,000 $ (99,540) 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 East $361,000 448 $ 289,000 Division Central $ 650,000 $ 337,000 30% West $ 590,000 438 $ 192,000 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 $25,000 based on the belief that it would increase that division's sales by 13%. 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: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,601,000 607,540 993,460 1,093,000 $ (99,540) 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 East $361,000 448 $ 289,000 Division Central $ 650,000 $ 337,000 30% West $ 590,000 438 $ 192,000 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 $25,000 based on the belief that it would increase that division's sales by 13%. 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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th Ve 29 Profa antagomed by webw Best Complete this ten by entering your arewers in the tabs below. 29 Tally Colbyring the ben F The Marketing Department has preceding the West Drenthy advertising by the the increase that ch sice's ses y 13% Ataring these are accurate rach would the company's net eporting increasa (decrease the pripreme (ont round interesations) Vaudreand the averting p Diva Centr Ho
Transcribed Image Text:th Ve 29 Profa antagomed by webw Best Complete this ten by entering your arewers in the tabs below. 29 Tally Colbyring the ben F The Marketing Department has preceding the West Drenthy advertising by the the increase that ch sice's ses y 13% Ataring these are accurate rach would the company's net eporting increasa (decrease the pripreme (ont round interesations) Vaudreand the averting p Diva Centr Ho
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) $1,601,000 607,540 993,460 1,093,000 $ (99,540) 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 East $361,000 448 $ 289,000 Division Central $ 650,000 $ 337,000 30% Complete this question by entering your answers in the tabs below. West $ 590,000 438 $ 192,000 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 $25,000 based on the belief that it would increase that division's sales by 13%. 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?
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) $1,601,000 607,540 993,460 1,093,000 $ (99,540) 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 East $361,000 448 $ 289,000 Division Central $ 650,000 $ 337,000 30% Complete this question by entering your answers in the tabs below. West $ 590,000 438 $ 192,000 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 $25,000 based on the belief that it would increase that division's sales by 13%. 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?
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