Reference no: EM133059164

Question - The following is Alpha Hotel's income statement for the year ended December 31, 2020.

Alpha Hotel Income Statement For the Year Ending December 31, 2020

Revenue $800,000

Expenses

Administrative Expense 25,000

Marketing Expense 12,000

Variable Wages Expense 320,000

Management Salaries Expense 120,000

Rent Expense 200,000

Utilities Expense 60,000

Total Expenses 737,000

Net Income $63,000

Alpha Hotel is a limited-service hotel with 18 rooms and no food and beverage operations. Management does not intend to spend a lot of time and money on budgeting. The manager has determined the 2021 budgeted income statement should simply reflect the following predicted changes from the 2020 income statement:

Revenues will increase by 2.5%.

Marketing costs will decrease by 2%.

Management salaries will increase by 4%.

Variable wages will remain consistent as a percentage of revenue.

Utilities will increase by 2%.

Administrative costs and rent will remain the same.

Required - Prepare the budgeted income statement for the year ending December 31, 2021, using the incremental budgeting approach.