re Ihttps://newconnect mheducation.com/flow/connect.html nt 5-1 Week 5 Practice

ID: 2554233 • Letter: R

Question

re Ihttps://newconnect mheducation.com/flow/connect.html nt 5-1 Week 5 Practice 6 Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as she recent monthly contribution format income statement $ 1,585,889 512,480 992,600 1,892,688 s (99,40e) Contribution pargitn 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. A Accounting Department has developed the following information: ivisi 355,880 $638,8 $520,99 $285,080 $331,880 $288,800 East Sales Variable expenses as a percentage of sales Traceable fixed expenses 42% 23% 42% Required: 1. Prepare a contribution formet income statement segmented by divisions 2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $24,000 based a would increase that division's sales by 15% Assuming these estimates are accurate, how much would the company's 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. Prev 1of 4 Next > search TOSHIBA

Explanation / Answer

Answer:

Total
Company

East

Central

West

Sales

1,505,000

355000

630,000

520,000

Less: Variable cost

512,400

149100

144900

218400

Contribution margin

992,600

205900

485100

301600

Traceable fxed expenses

824,000

285000

331000

208000

Divisional segment margin

168,600

-79100

154100

93600

Common fxed expenses not
traceable to divisions
(1092000-824000)

268,000

Net operating loss.

-99,400

____________________________________________

Incremental sales ($520,000 × 15%)

78000

Contribution margin ratio
($301600 ÷ $520,000)

58.0%

Incremental contribution margin.

45240

Less incremental advertising expense

-24000

Incremental net operating income

21240

2-b ) Yes, the advertising program should be initiated