Chapter 6 ExercisesX+ :0.5640399510776057 1523818424733 Wingate Company, a whole

Question

Chapter 6 ExercisesX+ :0.5640399510776057 1523818424733 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, which follows Sales Variable expenses $ 1,687,000 564,690 Contribution margin Fixed expenses 1,122,310 1,235,000 Net operating income (loss) $ (112,690) 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 Central 417000 $670,000 $600,000 East West Sales Variable expenses as a percentage of sales Traceable fixed expenses 47% 21% 38% $251,000 $321,000 $197,000 Required: 1. Prepare a contribution format income statement segmented by divisions, as desired by the president Total C East Central West 2-a As a result of a marketing study, the president believes that sales in the West Division could be increased by 14% if monthly advertising in that division were increased by $29,000. Calculate the incremental net operating income

Explanation / Answer

SEGMENT-WISE INCOME STATEMENT TOTAL East Central West AMOUNT $ AMOUNT $ AMOUNT $ AMOUNT $ Sales Revenue 1,687,000 417,000 670,000 600,000 Less: Variable Cost 564,690 195,990 140,700 228,000 Contribution margin 1,122,310 221,010 529,300 372,000 Less: Traceable Fixed cost 769,000 251,000 321,000 197,000 SEGMENT MARGIN 353,310 -29,990 208,300 175,000 Less: Common Fixed cost 466,000 Net Operating Income -112,690 Req 2-a: Incremental income: Increase in revenue of West division (600,000*14%) 84000 CM ratio (100-38) 62% Incremental Contribution margin 52080 Less: Advertisement expense 29000 Incremental income: 23080

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.