Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A contribution Income statement for the Nantucket Inn is shown below. (Ignore Income taxes.) Revenue Less: Variable expenses Contribution margin Less: Fixed expenses Net income

image text in transcribed

A contribution Income statement for the Nantucket Inn is shown below. (Ignore Income taxes.) Revenue Less: Variable expenses Contribution margin Less: Fixed expenses Net income $ 2,800,eee 1,300,eee $ 780, eee 560, see $ 140, mee Required: 1. Show the hotel's cost structure by Indicating the percentage of the hotel's revenue represented by each item on the income statement. 2. Suppose the hotel's revenue declines by 30 percent. Use the contribution-margin percentage to calculate the resulting decrease in net Income. 3. What is the hotel's operating leverage factor when revenue is $2,000,000? 4. Use the operating leverage factor to calculate the increase in net Income resulting from a 25 percent Increase in sales revenue

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Dcaa Audits Widespread Problems With Audit Quality Require Significant Reform: Gao 09 1009t

Authors: U. S. Government Accountability Office

1st Edition

1287232027, 978-1287232025

More Books

Students also viewed these Accounting questions

Question

Give a brief defi ni tion of the terms population and sample.

Answered: 1 week ago