
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department believes increasing the West Division's monthly advertising by $24,000 will increase that division's
sales by 11%. 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?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Req 2B
Prepare a contribution format income statement segmented by divisions.
< Req 1
Total Company
East
Req 2A >
Division
Central
West
![Exercise 6-11 (Algo) Segmented Income Statement [LO6-4]
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly
contribution format income statement:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income (loss)
$ 1,535,000
631,600
903,400
994,00
$ (90,600)
In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the
Accounting Department provided the following information:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
East
$ 375,000
$ 287,000
56%
Division
Central
$ 660,000
26%
$ 336,000
West
$ 500,000
50%
$ 205,000
Required:
1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department believes increasing the West Division's monthly advertising by $24,000 will increase that division's
sales by 11%. 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?](https://content.bartleby.com/qna-images/question/e6069db0-f496-4c11-99c9-1e809a876661/00b92697-e774-4af3-8c0e-9f705708c796/k4ue88b_thumbnail.jpeg)
Transcribed Image Text:Exercise 6-11 (Algo) Segmented Income Statement [LO6-4]
Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly
contribution format income statement:
Sales
Variable expenses
Contribution margin
Fixed expenses
Net operating income (loss)
$ 1,535,000
631,600
903,400
994,00
$ (90,600)
In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the
Accounting Department provided the following information:
Sales
Variable expenses as a percentage of sales
Traceable fixed expenses
East
$ 375,000
$ 287,000
56%
Division
Central
$ 660,000
26%
$ 336,000
West
$ 500,000
50%
$ 205,000
Required:
1. Prepare a contribution format income statement segmented by divisions.
2-a. The Marketing Department believes increasing the West Division's monthly advertising by $24,000 will increase that division's
sales by 11%. 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?
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