Question: can i get the solution please? The Wheatsheaf Inn operates a hotel and restaurant. Data on revenues and expenses for the month ended March 31,
The Wheatsheaf Inn operates a hotel and restaurant. Data on revenues and expenses for the month ended March 31, 2020 is as follows: Total $ 150,000 62.000 88,000 Hotel $90,000 27.000 63,000 Restaurant $ 60,000 35,000 25,000 Revenues Less: variable expenses Contribution margin Less: fixed expenses Direct advertising Depreciation, special equipment General administrative overhead Total fixed expenses Operating income (loss) 16,000 22,000 30.000 68,000 $ 20.000 10,000 12,000 18,000 40.000 $ 23,000 6,000 10.000 12.000 28,000 $_(3.000) Because of the losses shown by the restaurant, management is considering closing the restaurant and only running the hotel. Notes: The special equipment is specific to each segment and has no resale value or alternative use. Closing the restaurant would have no effect on the company's general administrative overhead If the restaurant is closed, the space can be rented to another company for $4,000 per month Required: 1. Will operating income increase or decrease, and by how much, if the restaurant is closed? (3 marks) 2. Based on your calculation in part 1, should the restaurant be closed? Why? (1 mark) 3. Complete the segmented income statement, in good form that is started below. (4 marks)
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