Question
Ben's Books analyzes profitability of three segments: new books, used books, and stationery. The financials are: Segment Revenue Direct Costs New Books $400,000 $240,000 Used
Ben's Books analyzes profitability of three segments: new books, used books, and stationery. The financials are:
Segment | Revenue | Direct Costs |
New Books | $400,000 | $240,000 |
Used Books | $200,000 | $120,000 |
Stationery | $90,000 | $50,000 |
Ben is considering converting the stationery area into an expanded new books area.
Required: a. Calculate the necessary increase in the new books segment margin to maintain Ben’s Books’ current income. b. Identify other considerations Ben should evaluate before deciding to eliminate the stationery area to expand new books.
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Management Accounting Information for Decision-Making and Strategy Execution
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
6th Edition
137024975, 978-0137024971
