Odessa 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.

Odessa Hotel - Restaurant Segmented Contribution Margin Income Statement For the Year Ended December 31, 2020
	Breakfast	Lunch	Dinner	Total
Revenue	$416,000	$549,000	$586,000	$1,551,000
Variable Costs	$218,000	$215,000	$221,000	$654,000
Contribution Margin	$198,000	$334,000	$365,000	$897,000
Fixed Costs	$137,000	$430,000	$302,000	$869,000
Income from Operations	$61,000	$-96,000	$63,000	$28,000

Recommend whether management should keep or drop the lunch period service based on the following independent scenarios.
Do not enter dollar signs or commas in the input boxes.
Use the negative sign for a decrease in income.
Indicate keep or drop using the drop-down lists.

a) Assume that all the fixed costs relating to the lunch service would remain with the company if it stopped serving lunch.
Change in Income from Operations: $Answer
Odessa Hotel should Answerdropkeep lunch

b) Assume that all the fixed costs relating to lunch service would no longer be incurred by the company if it stopped serving lunch.
Change in Income from Operations: $Answer
Odessa Hotel should Answerdropkeep lunch

c) Assume that only 30% of the fixed costs relating to lunch service would remain if the company stopped serving lunch.
Change in Income from Operations: $Answer
Odessa Hotel should Answerdropkeep lunch