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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 $ 2,150,000 1,160,000 $ 990,000 645,000 $ 345,000 Required: 1. Prepare a contribution income statement if the hotel's 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 hotel's volume of activity. Fixed expenses decline

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 $ 2,150,000 1,160,000 $ 990,000 645,000 $ 345,000 Required: 1. Prepare a contribution income statement if the hotel's 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 hotel's volume of activity. Fixed expenses decline

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $ 2,150,000 1,160,000 $ 990,000 645,000 $ 345,000 Required: 1. Prepare a contribution income statement if the hotel's 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 hotel's volume of activity. Fixed expenses decline by $230,000.
Transcribed Image Text: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 $ 2,150,000 1,160,000 $ 990,000 645,000 $ 345,000 Required: 1. Prepare a contribution income statement if the hotel's 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 hotel's volume of activity. Fixed expenses decline by $230,000.
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