Answer:
Wingate Company
1. A Contribution Format Income Statement for divisions:
2a. Increase monthly advertising for the West Division by $28,000 to increase its sales by 12%
                                     East          Central        West          Total
Sales                   $412,000  $670,000   $520,000 $1,602,000
Variable exp.         181,280     207,700      166,400      555,380
Contribution 
           margin    $230,720    462,300    353,600    1,046,620
Fixed expenses  290,000    332,000     191,000       813,000
Non-Traceable 
     Fixed Expenses                                                       338,000
Net operating Income
   (loss)               ($59,280)  $130,300  $162,600   ($104,380)
2b. How much Company's Net Operating Income Increase (Decrease) with the implementation of the above Proposal:
Net operating income before advert = $162,600
Division's net operating income after advert = $160,366
Therefore, the company's net operating loss will increase by $2,234
Explanation:
a) Wingate Company's recent monthly contribution format Income Statement:
Sales                                    $ 1,602,000
Variable expenses                    555,380
Contribution margin               1,046,620
Fixed expenses                        1,151,000
Net operating income (loss) $ (104,380) 
b) Division West's Income Statement:
Sales                                 $582,400 ($520,000 x 1.12)
Variable expenses             203,034  ($181,280 x 1.12)
Contribution margin        $379,366
Fixed Expenses                 219,000 ($191,000 + 28,000)
Net Operating Income    $160,366
c) If sales value increases by 12%, the variable expenses will increase proportionately, unless there is an increase in the price, which will ultimately reduce demand, further depressing the sales value.  This is why it is called Variable Cost.  Therefore, a different result will be obtainable if the variable expenses are held constant, contrary to its behavior.