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6 City Hotel's restaurant provides 3 services namely, breakfast, lunch, and damer services. The accountant has prepared a segmented contribution margin income statement for the

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6 City Hotel's restaurant provides 3 services namely, breakfast, lunch, and damer services. The accountant has prepared a segmented contribution margin income statement for the past year based on the 3-meal pedods, as shown below The Hotel managers concerned about the lunch service, as it has been showing a loss for the past few years 22 Sales Less Varimble expenses Contribution margin Lets Fixed expenses Het operating income (los) Breakfast 5 621,000 5 261.000 se,eee 292,609 367.000 LOR Dinne TO 714,000 5776,000 2,111,000 295.000 20.000 833 420,000 490,000 1,278,000 481,000 998,111,129.000 000) $100.000 S 295.000 A study indicates that $375,300 of the fixed expenses being charged to Lunch are sunk costs or allocated costs that will continue even if the Lunch service is dropped. In addition, the elimination of the Lunch service will result in a 20% decrease in the sales of the Breakfast service and a 15% decrease in Dinner service Required: If the Lunch service is dropped, what will be the change in net operating income of the company as a whole

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