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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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