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Capital City Hotels restaurant is open for breakfast, lunch and dinner. The accountants prepared a segmented contribution margin income statement for the past year based
Capital City Hotels restaurant is open for breakfast, lunch and dinner. The accountants prepared a segmented contribution margin income statement for the past year based on the three meal periods as shown below. The manager is concerned with the lunch period, as it has been showing a loss for the past few years. Capital City Hotel - Restaurant Segmented Contribution Margin Income Statement For the Year Ended December 31, 2020 Breakfast Lunch Dinner Total Revenue $470,000 $509,000 $497,000 $1,476,000 Variable Costs $257,000 $243,000 $270,000 $770,000 Contribution Margin $213,000 $266,000 $227,000 $706,000 Fixed Costs $125,000 $356,000 $138,000 $619,000 Income from Operations $88,000 $-90,000 $89,000 $87,000 Recommend whether management should keep or drop
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