A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.) ...
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Accounting
A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.)
| Revenue | $ | 2,150,000 | |
| Less: Variable expenses | 1,160,000 | ||
| Contribution margin | $ | 990,000 | |
| Less: Fixed expenses | 645,000 | ||
| Net income | $ | 345,000 | |
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 $230,000.
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