Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mostrecent monthly contribution format income statement:SalesVariable expensesContribution marginFixed expensesNet operating income (loss)$ 1,611,000526,6101,084,3901,193,000$ (108,610)In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, theAccounting Department has developed the following information:EastSales$ 411,000DivisionCentral$ 670,000West$ 530,000Variable expenses as a percentage of salesTraceable fixed expenses51%22%32%$ 289,000$ 325,000$ 192,000Required: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 $21,000 based on the belief that itwould increase that division's sales by 17%. Assuming these estimates are accurate, how much would the company's net operatingincome increase (decrease) if the proposal is implemented?2-b. Would you recommend the increased advertising?

Contribution margin means the difference between the selling price and variable cost. Break even…

Answered: Wingate Company, a wholesale…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wingate Company, a wholesale distributor of electronic equipment, has been experlencing losses for some time, as shown by Its most recent monthly contribution format Income statement: $ 1,671,00e 718, 890 Sales Variable expenses Contribution margin Fixed expenses 952,110 1,847, 000 Net operating income (loss) (94,890) 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 $431, 000 $660, 000 $580, e0e Variable expenses as a percentage of sales Traceable fixed expenses 59% 37% 38% $270, 00e $ 340, 000 $ 207,000 Requlred: 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 $27,000 based on the bellef that it would increase that division's sales by 14%. Assuming these estimates are accurate, how much…
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