Wingate Company, a wholesale distributor of electronic equipment, has been exper

Question

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 $1,607,000 643,410 Contribution margin Fixed expenses 963,590 1,060,000 Net operating income (loss) $ (96,410) 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 $427,000 $680,000 $500,000 West Sales Variable expenses as a percentage of sales Traceable fixed expenses 4340 35% 4 % $253,000 $326,000 $209,000

Explanation / Answer

Solution 1:

Solution 2a:

Incremental net operating income = -87060 - (-96410) = $9,350

Divisional contribution format income statement - Wingate Company Particulars Total Company Divisions East Central West Sales $1,607,000.00 $427,000.00 $680,000.00 $500,000.00 Variable Expenses $643,410.00 $183,610.00 $244,800.00 $215,000.00 Contribution Margin $963,590.00 $243,390.00 $435,200.00 $285,000.00 Traceable Fixed Expenses $788,000.00 $253,000.00 $326,000.00 $209,000.00 Divisional net operating income $175,590.00 -$9,610.00 $109,200.00 $76,000.00 Common Fixed Expense $272,000.00 Overall Net Operating Income -$96,410.00

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