hh.2 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)$ 1,535,000629,600905,400996,000(90,600)$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:SalesVariable expenses as a percentage of salesTraceable fixed expensesDivisionCentral$385,000 $610,000East$286,000 $334,00058%25%West$540,000$193,00047%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 thatit would increase that division's sales by 15%. 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?

The contribution income statement provides a valuable tool for analyzing the profitability of a…

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 experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 1,610,000 Variable expenses 659,000 Contribution margin 951,000 Fixed expenses 1,046,000 Net operating income (loss) $ (95,000) 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 $ 430,000 $ 610,000 $ 570,000 Variable expenses as a percentage of sales 52 % 34 % 40 % Traceable fixed expenses $ 288,000 $ 321,000 $ 193,000 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 $29,000 based on the belief that it would…
A company is a wholesale distributor of electronic equipment who has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales P 1,000,000Variable expenses 390,000Contribution Margin 610,000Fixed Expenses 625,000Net operating Income (loss) P(15,000) 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 WestSales P250,000 P400,000 P350,000Variable expenses as a percentage of sales 52% 30% 40%Traceable Fixed Expenses P160,000 P200,000 P175,000 Required: a. Prepare a contribution format income statement segmented by the division. East Central West b. The marketing department has proposed increasing the West Division’s monthly advertising by P15,000 believing that it…
Bovine Company, a wholesale distributor of umbrellas, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement: Sales $ 2,070,000 Variable expenses 895,880 Contribution margin 1,174,120 Fixed expenses 1,319,000 Operating loss $ (144,880 ) In an effort to isolate the problem, the president has asked for an income statement segmented by geographic market. Accordingly, the Accounting Department has developed the following: Geographic Market South Central North Sales $ 607,000 $ 806,000 $ 657,000 Variable expenses as a percentage of sales 50 % 36 % 46 % Traceable fixed expenses $ 320,000 $ 480,000 $ 307,000 Required:1. Prepare a contribution format income statement segmented by geographic market, as requested by the president. 2-a. The company’s sales manager believes that sales in the Central…
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A guitar manufacturer is considering eliminating its electric guitar division because its $90,790 expenses are higher than its $84,030 sales. The company reports the following expenses for this division. AvoidableExpenses UnavoidableExpenses Cost of goods sold $ 63,000 Direct expenses 9,250 $ 2,950 Indirect expenses 1,010 2,150 Service department costs 10,400 2,030 Should the division be eliminated? (Any loss amount should be indicated with minus sign.)
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Little Cory Corporation is considering dropping product G41O. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued.Required:a. According to the company's accounting system, what is the net operating income earned by product G41O? b. What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped? There is not a word length requirement for this question; however, you must show your work. sales 450,000 variable expenses 185,000 fixesd manufacturing expenses 149,000 fixed selling and administered expenses 113,000
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