10 A local hotel chain is considering dropping one of their hotels called the Bear Lodge. Management is concerned about the current quarters loss. If the hotel is dropped: The hotel manager currently working at the Bear Lodge will have to move to another hotel as they are a long-term employee who is currently earning an annual salary of $75,000. Three-quarters of the insurance is directly related to the Bear lodge. The remaining insurance would be unaffected as it relates to the hotel chains overall liability. 90% of the advertising costs will be discontinued. The accountant has prepared the following information on the Bear Lodge. Sales $ 2,400,000 Less: variable expenses (1,000,000) Contribution margin 1,400,000 Less: fixed costs Wages 1,000,000 Insurance 40,000 Advertising 500,000 (1,540,000) Net operating income (loss) $ (140,000) Required - a) Prepare a new contribution margin statement with the remining revenues/expenses if the Bear Lodge is dropped. b) Should the Bear Lodge be dropped

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a To prepare a new contribution margin statement for the hotel chain after dropping the Bear Lodge w... View the full answer