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A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.) Revenue $ 1,950,000 Less: Variable expenses 1,080,000 Contribution margin $ 870,000

A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.)

Revenue $ 1,950,000
Less: Variable expenses 1,080,000
Contribution margin $ 870,000
Less: Fixed expenses 585,000
Net income $ 285,000

Required: 1. Prepare a contribution income statement if the hotels volume of activity increases by 25 percent, and fixed expenses increase by 50 percent. 2. Prepare a contribution income statement if the ratio of variable expenses to revenue doubles. There is no change in the hotels volume of activity. Fixed expenses decline by $190,000.

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