Question
George's Garden analyzes profitability of three segments: plants, pots, and fertilizers. The financials are: Segment Revenue Direct Costs Plants $400,000 $240,000 Pots $150,000 $90,000 Fertilizers
George's Garden analyzes profitability of three segments: plants, pots, and fertilizers. The financials are:
Segment | Revenue | Direct Costs |
Plants | $400,000 | $240,000 |
Pots | $150,000 | $90,000 |
Fertilizers | $70,000 | $40,000 |
George is considering converting the fertilizers area into an expanded plants area.
Required: a. By how much must the plants segment margin increase to maintain George’s Garden’s current income? b. Discuss other factors George should consider before deciding to eliminate the fertilizers area to expand plants.
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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
