A hotel has the following profit and loss statement for its quietest month of the year.
Gala Hotel Ltd
Profit and Loss Statement for February

\begin{array}{lrr}\text { Revenue } & \$ 100,000 & \\\text { Cost of sales } & \underline{34,000} & \\\text { Gross profit } & & 66,000\\\text { Less expenses } & & \\\text { Maintenance } & 24,000 & \\\text { Salaries } & 32,000 & \\\text { Electricity } & \underline{55,000} & \\& & \underline{111,000} \\\text { Net operating loss } & & \underline{45,000}\end{array}

The hotel accountant has determined that:

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The hotel pays $10,000 per month under a maintenance agreement to a contractor. The remaining maintenance expense is variable.

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50% of salaries are fixed.

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Variable electricity expense in February was $25,000, the remainder is fixed.
What would have been the impact on the hotel's profit for the year if it had closed in February?
A) Reduced profit by $5,000.
B) Reduced profit by $8,000.
C) Reduced profit by $11,000.
D) Reduced profit by $14,000.
E) None of the above

Variable Costs Are Costs That

Multiple Choice

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