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 20 percent. Use the contribution-margin percentage to calculate the resulting decrease net income. 3. What is the hotel's operating leverage factor when revenue is $1,500,000? 4. Use the operating leverage factor to calculate the increase in net income resulting from a 25 percent increase in sales revenue.

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 20 percent. Use the contribution-margin percentage to calculate the resulting decrease net income. 3. What is the hotel's operating leverage factor when revenue is $1,500,000? 4. Use the operating leverage factor to calculate the increase in net income resulting from a 25 percent increase in sales revenue.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 24P

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