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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time,...

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Accounting

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:
SalesVariable expensesContribution marginFixed expensesNet operating income (loss)$ 1,691,000705,770985,2301,084,000$ (98,770)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:DivisionEastCentralWest$ 421,000$ 690,000$ 580,00057%28%47%$ 259,0005321,000$ 196,000SalesVariable expenses as a percentage of salesTraceable fixed expensesRequired: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 20%. 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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