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 Variable expenses Contribution margin Fixed expenses Net operating income (loss) 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 $ 1,550,000 531,900 1,018, 100 1,120,000 $ (101,900) Req 1 Req 2A East $ 370,000 Req 2B 54% $ 265,000 Complete this question by entering your answers in the tabs below. 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 $25,000 based on the belief that it would increase that division's sales by 18%. 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? Division Central $ 650,000 25% $ 337,000 Prepare a contribution format income statement segmented by divisions. Total Company East 0 West $530,000 0 $ 192,000 32% Division Central 0 West 0
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 Variable expenses Contribution margin Fixed expenses Net operating income (loss) 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 $ 1,550,000 531,900 1,018, 100 1,120,000 $ (101,900) Req 1 Req 2A East $ 370,000 Req 2B 54% $ 265,000 Complete this question by entering your answers in the tabs below. 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 $25,000 based on the belief that it would increase that division's sales by 18%. 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? Division Central $ 650,000 25% $ 337,000 Prepare a contribution format income statement segmented by divisions. Total Company East 0 West $530,000 0 $ 192,000 32% Division Central 0 West 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Variable expenses
Contribution margin
Fixed expenses
Net operating income (loss)
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
$ 1,550,000
531,900
1,018, 100
1,120,000
$ (101,900)
Req 1
Req 2A
East
$ 370,000
Req 2B
54%
$ 265,000
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 $25,000 based on the belief that it
would increase that division's sales by 18%. 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.
Division
Central
$ 650,000
25%
$ 337,000
Prepare a contribution format income statement segmented by divisions.
Total Company East
0
West
$ 530,000
32%
$ 192,000
0
Division
Central
0
West
0
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