1. value: 20.00 points Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses...
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1. value: 20.00 points Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales Variable expenses $2,090,000 873,540 Contribution margin Fixed expenses 1,216,460 1,323,000 Operating loss $ (106,540) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Geographic Market South $609,000 Sales Variable expenses as a percentage of sales Traceable fixed expenses Central $808,000 31% $539,000 North $673,000 41% $309,000 $329,000 Required: 1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. Total Company Geographic Market Central South North 2-a. The company's sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising is increased by $34,000. Calculate the incremental net operating income. Incremental net operating income 2-b. Would you recommend the increased advertising? O No Yes
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