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) Sales Variable expenses as a percentage of sales Traceable fixed expenses 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: $ 1,546,000 670, 180 Req 1 875,820 963,000 $ (87,180) Req 2A Req 2B East $ 386,000 58% $ 251,000 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 $26,000 based on the belief that it would increase that division's sales by 14%. 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 $ 610,000 38% $ 330,000 Prepare a contribution format income statement segmented by divisions. West $ 550,000 39% $ 193,000 Total Company East Division Central West
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) Sales Variable expenses as a percentage of sales Traceable fixed expenses 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: $ 1,546,000 670, 180 Req 1 875,820 963,000 $ (87,180) Req 2A Req 2B East $ 386,000 58% $ 251,000 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 $26,000 based on the belief that it would increase that division's sales by 14%. 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 $ 610,000 38% $ 330,000 Prepare a contribution format income statement segmented by divisions. West $ 550,000 39% $ 193,000 Total Company East Division Central West
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
$ 1,546,000
670, 180
875,820
963,000
$ (87,180)
Req 1
Req 2A
East
$ 386,000
58%
$ 251,000
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 $26,000 based on the belief that
it would increase that division's sales by 14%. 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.
Req 2B
Division
Central
$ 610,000
38%
$ 330,000
Prepare a contribution format income statement segmented by divisions.
Total Company East
West
$ 550,000
39%
$ 193,000
Division
Central
West
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