This case is a continuation of the Burburr Resorts & Hotels Corporation serial case that began in Chapter 1. The components of the Burburr serial case can be completed in any order. Burburr Resorts & Hotels Corporation is a fictitious corporation.

What follows are the income statements for Burburr Resorts & Hotels Corporation for the three years ending December 31, 2019 through 2021.

Requirements:

To answer these questions, calculate a segment margin for each of the departments.
Using the statements of operations (income statements) given, answer the following questions.
1. Calculate the segment margin for the three departments: Casinos, Food and Beverage, and Rooms.
2. Given the segment margins that you calculated, should Burburr discontinue any of the three departments? Why or why not?
3. What expenses are likely to be included in “Miscellaneous fixed expenses”? Should these expenses be allocated to the three departments if Burburr is evaluating whether it should discontinue any departments? Why or why not?

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Burburr Resorts & Hotels Corporation Consolidated Statements of Operations (Condensed and adapted) In millions Years ended December 31, 2019 2020 2021 Revenues Casino revenue $ 4,247 $ 2,168 $ 1,608 Food and beverage revenue 1,574 982 822 Rooms revenue 1,519 1,074 950 Other revenues 1,051 644 497 Net revenues $ 8,391 $ 4,868 $ 3,877 Operating Expenses Variable casino expenses $2,393 $1,213 $ 890 Variable food and beverage expenses Variable rooms expenses 1,106 480 693 572 360 318 Miscellaneous fixed expenses 3,673 2,065 1,871 Total operating expenses $ 7,652 $ 4,331 $ 3,651 Income/(loss) from operations $ 739 $ 537 $ 226