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Exercise - Segmented Income Statement
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
724,900
Contribution margin
885,100
Fixed expenses
974,000
Net operating income (loss)
$(88,9000)
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
$370,000
$650,000
$590,000
Variable expenses as a percentage of sales
59%
38%
44%
Traceable fixed expenses
$257,000
$327,000
$208,000
Required:
1. Prepare a contribution format income statement segmented by divisions.
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2-b. Would you recommend the increased advertising?
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