Question

In: Accounting

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...

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 $ 1,581,000
Variable expenses 552,420
Contribution margin 1,028,580
Fixed expenses 1,131,000
Net operating income (loss) $ (102,420)

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 $ 391,000 $ 660,000 $ 530,000
Variable expenses as a percentage of sales 52 % 28 % 31 %
Traceable fixed expenses $ 299,000 $ 333,000 $ 198,000

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 $23,000 based on the belief that it would increase that division's sales by 12%. 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?

Solutions

Expert Solution


Related Solutions

Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,612,000 Variable expenses 541,980 Contribution margin 1,070,020 Fixed expenses 1,177,000 Net operating income (loss) $ (106,980) 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 $ 402,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,617,000 Variable expenses 586,830 Contribution margin 1,030,170 Fixed expenses 1,133,000 Net operating income (loss) $ (102,830) 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 $ 447,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,617,000 Variable expenses 586,830 Contribution margin 1,030,170 Fixed expenses 1,133,000 Net operating income (loss) $ (102,830) 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 $ 447,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,613,000 Variable expenses 594,690 Contribution margin 1,018,310 Fixed expenses 1,120,000 Net operating income (loss) $ (101,690) 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 $ 393,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,687,000 Variable expenses 602,830 Contribution margin 1,084,170 Fixed expenses 1,193,000 Net operating income (loss) $ (108,830) 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 $ 447,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,569,000 Variable expenses 656,910 Contribution margin 912,090 Fixed expenses 1,003,000 Net operating income (loss) $ (90,910) 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 $ 429,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,633,000 Variable expenses 578,910 Contribution margin 1,054,090 Fixed expenses 1,159,000 Net operating income (loss) $ (104,910) 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 $ 413,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,586,000 Variable expenses 623,640 Contribution margin 962,360 Fixed expenses 1,059,000 Net operating income (loss) $ (96,640) 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 $ 416,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,561,000 Variable expenses 548,660 Contribution margin 1,012,340 Fixed expenses 1,114,000 Net operating income (loss) $ (101,660) 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 $ 381,000 $...
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as...
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 $ 1,676,000 Variable expenses 553,600 Contribution margin 1,122,400 Fixed expenses 1,235,000 Net operating income (loss) $ (112,600) 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 $ 416,000 $...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT