60.1K

Verified Solution

Link Copied!

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 $ 1.000, eee Variable expenses 390,eee Contribution margin 610,000 Fixed expenses 625, eee Net operating income (103) $ (15,000) 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 $ 250,000 52% $ 160,000 Division Central $ 400, Bee 30% $ 200,000 West $ 350,000 40% $ 175,000 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 $15,000 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? Complete this question by entering your answers in the tabs below. Req1 Req 2A Req 28 Prepare a contribution format income statement segmented by divisions. Division Total Company East Central West 0 0 0 0 0 S 0 $ 0 $ 0 $ 0 2-b. Would you recommend the increased advertising? Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 28 The Marketing Department has proposed increasing the West Division's monthly advertising by $15,000 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? Net operating income will

Answer & Explanation Solved by verified expert

See Answer