In an effort to isolate the problem the president has asked

Reference no: EM13596619

Bovine Company, a wholesale distributor of DVDs, has been experiencing losses for some time, as shown by its most recent monthly contribution format income statement below:


Sales	$	1,574,000
Variable expenses		668,940

Contribution margin		905,060
Fixed expenses		996,000

Net operating loss	$	(90,940)

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 data:

	Geographic Market
	South			Central			North
Sales	$	414,000		$	660,000		$	500,000
Variable expenses as a percentageof sales		61	%		29	%		45	%
Traceable fixed expenses	$	266,000		$	325,000		$	192,000

a.	The company's sales manager believes that sales in the Central geographic market could be increased by 11% if monthly advertising were increased by $28,000. Calculate the incremental net operating income.

Reference no: EM13596619

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