Answer:
Wingate Company
1. Contribution format income statement segmented by divisions:
Company East Central West
Sales $ 1,500,000 $350,000 $620,000 $530,000
Variable expenses 655,500 154,000 241,800 259,700
Contribution margin 844,500 $196,000 $378,200 $270,300
Traceable fixed expenses 819,000 294,000 329,000 196,000
Non-traceable fixed expenses 110,000
Net operating income (loss) $ (84,500) $(98,000) $49,200 $74,300
2. Decrease in net operating loss = $45,200
Explanation:
a) Data and Calculations:
Wingate's most recent monthly contribution format income statement:
Sales $ 1,500,000
Variable expenses 655,500
Contribution margin 844,500
Fixed expenses 929,000
Net operating income (loss) $ (84,500)
Additional data:
Division East Central West
Sales $ 350,000 $ 620,000 $ 530,000
Variable expenses as
a percentage of sales 44 % 39 % 49 %
Traceable fixed expenses $ 294,000 $ 329,000 $ 196,000
Implementation of the proposal:
Sales for West = $604,200 ($530,000 * 1.14)
Traceable fixed expenses for West = $225,000 ($196,000 + 29,000)
Contribution format income statement segmented by divisions:
Company East Central West
Sales $ 1,574,200 $350,000 $620,000 $604,200
Variable expenses 655,500 154,000 241,800 259,700
Contribution margin 918,700 $196,000 $378,200 $344,500
Traceable fixed expenses 848,000 294,000 329,000 225,000
Non-traceable fixed expenses 110,000
Net operating income (loss) $ (39,300) $(98,000) $49,200 $119,500
Decrease in net operating loss = $45,200 ($84,500 - 39,300)
