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A contribution income statement for the La Jolla Inn is shown below. (Ignore income taxes.)





  Revenue $ 2,400,000
  Less: Variable expenses
1,260,000




  Contribution margin $ 1,140,000
  Less: Fixed expenses
720,000




  Net income $ 420,000








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 $280,000.

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  • Category:- Accounting Basics
  • Reference No.:- M9797682

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