Business, 26.10.2021 14:10 theoretical0315

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 $1,575,000
Variable expenses 598,200
Contribution margin 976,800
Fixed expenses 1,074,000
Net operating income (loss) $(97,200)

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:

Division
East Central West
Sales $355,000 $650,000 $570,000
Variable expenses as a percentage of sales 48% 36% 34%
Traceable fixed expenses $262,000 $334,000 $207,000

Required:
a. Prepare a contribution format income statement segmented by divisions.
b. As a result of a marketing study, the president believes that sales in the West Division could be increased by 20% if monthly advertising in that division were increased by $15,000. Would you recommend the increased advertising?

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

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