6.pdf - Score 30/30 Points 100 6 Award 3.75 out of 3.75 points A contribution income statement for the Nantucket Inn is shown below(Ignore income taxes

6.pdf - Score 30/30 Points 100 6 Award 3.75 out of 3.75...

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6. Award: 3.75 out of 3.75 points A contribution income statement for the Nantucket Inn is shown below. (Ignore income taxes.) Revenue $ 2,200,000 Less: Variable expenses 1,474,000 Contribution margin $ 726,000 Less: Fixed expenses 484,000 Net income $ 242,000 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 30 percent. Use the contribution-margin percentage to calculate the resulting decrease in net income. 3. What is the hotel’s operating leverage factor when revenue is $2,200,000? 4. Use the operating leverage factor to calculate the increase in net income resulting from a 35 percent increase in sales revenue. Required 1 Required 2 Complete this question by entering your answers in the tabs below. Show the hotel’s cost structure by indicating the percentage of the hotel’s revenue represented by each item on the income statement.
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