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, which follows:
Sales $ 1,604,000
Variable expenses 663,400
Contribution margin 940,600
Fixed expenses 1,035,000
Net operating income (loss) $ (94,400)
In an effort to isolate the problem, the president has asked for an income statement segmented by division. Accordingly, the Accounting Department has developed the following information:
Division East Central West
Sales $ 394,000 $ 630,000 $ 580,000
Variable expenses as a percentage of sales 50 % 28 % 50 %
Traceable fixed expenses $ 278,000 $ 333,000 $ 210,000
Required:
1. Prepare a contribution format income statement segmented by divisions, as desired by the president.

Answer and Explanation:

The Preparation of contribution format income statement is shown below:-

                                    Wingate Company

                      Contribution format income statement

Particulars      Total               East               Central           West

Sales             $1,604,000    $394,000    $630,000    $580,000

Variable

Variable expenses as a

percentage of sales                50%            28%               50%

expenses      $663,400        $197,000   $176,400     $290,000

Contribution

margin            $940,600       $197,000   $453,600    $290,000

Traceable Fixed

expenses         $821,000       $278,000  $333,000     $210,000

Segment

margin             $119,600         ($81,000)    $120,600    $80,000

Common Fixed

expenses         $214,000

                ($1,035,000 - $821,000)

Net operating  

income (loss)     ($94,400)

The contribution margin income statement is the statement in which the net operating income or loss could be find out by deducting the variable cost and the fixed cost from the sales revenue

The answer is "loss of $ 944,000".

Explanation:

Please find the attachment for the solution.