Wingate Company a wholesale distributor of electronic equipm

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, which follows Sales Variable expenses $ 1,546,000 559,260 Contribution margin Fixed expenses 986,740 1,085,000 Net operating income (loss) $ (98,260) In an effort to isolate the problem, the president has asked for an income statement segmented by division Accordingly, the Accounting Department has developed the following information Division Central $376,000 $660,000 $510,000 East West Sales Variable expenses as a percentage of sales Traceable fixed expenses 51% 24% 41% $253,000 $322,000 $191,000 Required 1. Prepare a contribution format income statement segmented by divisions, as desired by the president. Division Total Company East Central West

Solution

2-a:

2-b Yes

		Total	East	Central	West
Sales		15,46,000	3,76,000	6,60,000	5,10,000
variable expeses %			51%	24%	41%
variable expeses		5,59,260	1,91,760	1,58,400	2,09,100
Contribution		9,86,740	1,84,240	5,01,600	3,00,900
Traceble fixed expense		7,66,000	2,53,000	3,22,000	1,91,000
Division profit		2,20,740	-68,760	1,79,600	1,09,900
Non traceble fixed expenses		3,19,000
Net operating income		-98,260