A contribution income statement for the Nantucket Inn is shown below. $($Ignore income taxes.$)$

Revenue $ $2,300,000$

Less: Variable expenses $1,564,000$

Contribution margin $ $736,000$

Less: Fixed expenses $552,000$

Net income $ $184,000$

EX $7-31($Algo$)$ Hotel and Restaurant; Cost Structure and Operating Leverage $($LO $7-2,7-4,7-8)$

Required:

Show the hotels cost structure by indicating the percentage of the hotels revenue represented by each item on the income statement.

Suppose the hotels revenue declines by $20$ percent. Use the contribution$-$margin percentage to calculate the resulting decrease in net income.

What is the hotels operating leverage factor when revenue is $$2,300,000?$

Use the operating leverage factor to calculate the increase in net income resulting from a $25$ percent increase in sales revenue.

Answer rating: 100% (QA)

Nantucket Inns Cost Structure and Operating Leverage 1 Cost Structure Analysis We can calculate the ... View the full answer