Business, 28.06.2021 17:40 24mm05

Wingate Company, a wholesale distributor of videotapes, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement, which follows: Sales $1,000,000
Variable expenses 390,000
Contribution margin 610,000
Fixed expenses 625,000
Net operating income (loss) ($15,000)

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 $250,000 $400,000 $350,000
Variable expenses as a percentage of sales 52% 30% 40%
Traceable fixed expenses $160,000 $200,000 $175,000

Required:
a. Prepare a contribution format income statement segmented by divisions, as desired by the president.
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 videotapes, has been experiencing losses for some time,...

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