A contribution income statement for the Nantucket Inn is shown
below. (Ignore income taxes.)
Revenue
$
1,200,000
Less: Variable expenses
624,000
Contribution margin
$
576,000
Less: Fixed expenses
432,000
Net income
$
144,000
Required:
Show the hotel’s cost structure by indicating the percentage of
the hotel’s revenue represented by each item on the income
statement.
Suppose the hotel’s revenue declines by 30 percent. Use the
contribution-margin percentage to calculate the resulting decrease
in net income.
What is the hotel’s operating...