- Exercise '5' 32 Refer to the income statement given in the preceding exercise. Prepare a new Continuation of contribution income statement for the La Jolla Inn in each of the following Preceding independent situations. [Ignore income taxes.) Exercise 1. The hotel's volume of activity increases by 25 percent, and fixed [LU T-Zi'} expenses increase by St] percent. 2. The ratio of variable expenses to revenue doubles. There is no change in the hotel's volume of activity. Fixed expenses decline by $iDJJDU