Elora Hotel's restaurant provides 3 services namely, breakfast, lunch, and dinner services. The accountant has prepared...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Elora Hotel's restaurant provides 3 services namely, breakfast, lunch, and dinner services. The accountant has prepared a segmented contribution margin income statement for the past year based on the 3-meal periods, as shown below. The Hotel manager is concerned about the lunch service, as it has been showing a loss for the past few years. Breakfast $419,000 $ 241,000 Contribution margin 178,000 Less: Fixed expenses 118,000 Net operating income (loss)$ 60,000 $ Sales Less: Variable expenses Lunch Dinner 740,000 $ 426,000$ 287,000 257,000 169,000 107,000 453,000 508,000 (55,000) $ 62,000 $ Total 1,585,000 785,000 800,000 733,000 67,000 Required: a study indicates that 40% of the fixed costs of lunch services are common costs, so will continue even if the lunch service is dropped. In addition, the elimination of the lunch service will result in a 10% increase in the sales of the breakfast service and a 15% increase in dinner service. What will be the effect on Net operating income if lunch service is dropped? Net operating income by Elora Hotel's restaurant provides 3 services namely, breakfast, lunch, and dinner services. The accountant has prepared a segmented contribution margin income statement for the past year based on the 3-meal periods, as shown below. The Hotel manager is concerned about the lunch service, as it has been showing a loss for the past few years. Breakfast $419,000 $ 241,000 Contribution margin 178,000 Less: Fixed expenses 118,000 Net operating income (loss)$ 60,000 $ Sales Less: Variable expenses Lunch Dinner 740,000 $ 426,000$ 287,000 257,000 169,000 107,000 453,000 508,000 (55,000) $ 62,000 $ Total 1,585,000 785,000 800,000 733,000 67,000 Required: a study indicates that 40% of the fixed costs of lunch services are common costs, so will continue even if the lunch service is dropped. In addition, the elimination of the lunch service will result in a 10% increase in the sales of the breakfast service and a 15% increase in dinner service. What will be the effect on Net operating income if lunch service is dropped? Net operating income by
Expert Answer:
Answer rating: 100% (QA)
After Elimination of Lunch Sales Breakefast Dinner Less Variable Expenses Breakfast Dinner Tot... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-1133940593
10th edition
Authors: Belverd E. Needles, Marian Powers, Susan V. Crosson
Posted Date:
Students also viewed these accounting questions
-
A Jiffy Lube franchise manager is concerned about the amount of time it takes for his technicians to change the oil and filters of cars. The current mean time for the complete operation is 18...
-
A project manager is concerned about rework, specifically about having to iterate on two activities that are on the critical path. A consultant tells the project manager not to worry, because the...
-
Palm Ltd. is a publicly accountable company that trades on the Toronto Stock Exchange. Palm has declared a cash dividend of $2,500,000 payable on December 31, 20X9. Dividends were last paid on...
-
The total cost of 2 chair and 1 table is 210 dollars. The total cost of 1 chair and 2 tables is 285 dollars. What is the cost of 1 chair?
-
Primo Paper, Inc., has three paper mills, one of which is located in Seattle, Washington. The Seattle mill produces 200 different types of coated and uncoated specialty printing papers. This large...
-
What are the main advantages of the gold standard?
-
Hedging (I) There are several schools of thought regarding hedging and its impact on the value of the firm. One school argues that, if the owners of the firm wish to hedge, they can do so in their...
-
Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2008. The following additional information is available. 1. Inventories are valued at lower of cost or market using...
-
(2) Company XYZ is looking to launch a new product next year, Product A will cost $50,000 to launch, and will bring in a profit of $100,000, Product B will cost $500,000 to launch and bring in a...
-
CSC20 Project 4 For this project our aim is to create a phone book with contact details. Individual contact information is added to the contact class. Then these contacts are added to the Phone books...
-
Which one the below does not define "Work role boundaries" of a care worker limits that allow a patient and staff to connect safely in a therapeutic relationship based on patients' needs rules of...
-
What is a beat frequency?
-
Draw a B-tree of order 3 and height 3 where each node is full.
-
A spring with a cubic nonlinearity equal to \(-3 x^{3}\) is an example of a (hardening, softening) _______________________________ nonlinearity.
-
The differential equations have a solution, \(\tilde{p}_{i}=\int_{0}^{t} \tilde{g}_{i}(t) e^{-\gamma_{i}(t-\tau)} d \tau\), called the ________. Regarding the derivation of modal analysis for a...
-
The differential equations governing the principal coordinates of the system are___________. Regarding the derivation of modal analysis for a system with a general damping matrix.
-
Explain the bar code technology... How it relates to logistics, i.e. Impact, Disruption, Drivers, Solutions Uses, Pros / Cons. Emphasis on Drivers and Solutions Provide examples and references 700...
-
If you want to solve a minimization problem by applying the geometric method to the dual problem, how many variables and problem constraints must be in the original problem?
-
For the past four years, three companies have dominated the soft drink industry, holding a combined 85 percent of market share. Won Cola, Inc., ranks second nationally in soft drink sales. Its...
-
Kitz Limo Service, Inc., was organized to provide limousine service between the airport and various suburban locations. It has just completed its second year of business. Its trial balance follows....
-
Gonzales Upholstery, Inc.'s trial balance at the end of its fiscal year follows. The following information is also available: a. A study of the company's insurance policies shows that $380 is...
-
7. Roger Schlafly applied for a patent for two prime numbers. (A prime number cannot be evenly divided by any number other than itself and 1. For example: 1, 2, 3, 5, 7, 11, 13.) Schlafly's numbers...
-
10. Babe Ruth was one of the greatest baseball players of all time. After Ruth's death, his daughters registered the words "Babe Ruth" as a trademark. MacMillan, Inc., published a baseball calendar...
-
9. Question: Aman asked a question of the advice columnist at his local newspaper. His wife had thought of a clever name for an automobile. He wanted to know if there was any way they could own or...
Study smarter with the SolutionInn App