Answer:
Wingate Company
1. Contribution format Income Statement segmented by divisions:
Division East Central West Company
Sales $ 369,000 $ 700,000 $ 520,000 $1,589,000
Variable expenses 214,020 168,000 234,000 616,020
Contribution margin 154,980 532,000 286,000 972,980
Traceable fixed expenses 292,000 332,000 207,000 831,000
Segment income (loss) (137,020) 200,000 79,000 141,980
Non-traceable fixed costs 239,000
Net operating income (loss) ($97,020)
2-a. Contribution format Income Statement segmented by divisions:
Division East Central West Company
Sales $ 369,000 $ 700,000 $ 613,600 $1,682,600
Variable expenses 214,020 168,000 276,120 658,140
Contribution margin 154,980 532,000 337,480 1,024,460
Traceable fixed expenses 292,000 332,000 228,000 852,000
Segment income (loss) (137,020) 200,000 109,480 172,460
Non-traceable fixed costs 239,000
Net operating income (loss) ($66,540)
2-b. The net operating loss decreased from $97,020 to $66,540, a difference of $30,480.
Explanation:
a) Data and Calculations:
Wingate's most recent monthly
Contribution-format Income Statement:
Sales $ 1,589,000
Variable expenses 616,020
Contribution margin 972,980
Fixed expenses 1,070,000
Net operating income (loss) $ (97,020)
Additional information:
Division East Central West
Sales $ 369,000 $ 700,000 $ 520,000
Variable expenses 214,020 168,000 234,000
as a percentage of sales 58 % 24 % 45 %
Traceable fixed expenses $ 292,000 $ 332,000 $ 207,000
West Division's:
Sales increased to $613,600 ($520,000 * 1.18)
Variable costs increased to $276,120 ($234,000 * 1.18)
Contribution margin increased to $337,480 ($286,000 * 1.18)
Segment income increased by $30,480 ($109,480 - $79,000)
Fixed cost increased to $228,000 ($207,000 + $21,000)
Change in net operating income (loss):
Before ($97,020)
After ($66,540)
Decrease $30,480
