Wingate Company, a wholesale distributor of electronicequipment, has been experiencing losses for some time, as shown byits most recent monthly contribution format income statement, whichfollows: Sales $ 1,645,000 Variable expenses 549,100 Contributionmargin 1,095,900 Fixed expenses 1,205,000 Net operating income(loss) $ (109,100) In an effort to isolate the problem, thepresident has asked for an income statement segmented by division.Accordingly, the Accounting Department has developed the followinginformation: Division East Central West Sales $ 395,000 $ 670,000 $580,000 Variable expenses as a percentage of sales 52 % 21 % 35 %Traceable fixed expenses $ 255,000 $ 336,000 $ 191,000 Required: 1.Prepare a contribution format income statement segmented bydivisions, as desired by the president. 2-a. As a result of amarketing study, the president believes that sales in the WestDivision could be increased by 15% if monthly advertising in thatdivision were increased by $25,000. Calculate the incremental netoperating income. 2-b. Would you recommend the increasedadvertising? Yes No rev: 07_08_2014_QC_50927
