Grill analyzes profitability of three operating units: restaurant, bar, and billiards room. Revenues, variable costs, and attributable fixed costs (which can be avoided if the unit is eliminated) for each unit are as follows:

Grill analyzes profitability of three operating units: restaurant, bar, and billiards room. Revenues, variable costs, and attributable fixed costs (which can be avoided if the unit is eliminated) for each unit are as follows:

	RESTAURANT	BAR	BILLIARDS ROOM
Revenue	$330,000	$180,000	$40,000
Variable costs	140,000	43,000	10,000
Attributable fixed costs	72,000	24,000	16,000

Billy, the owner, is considering converting the billiards area into an expanded bar area.

Requirements

(a)	Ignoring remodeling costs, by how much will the bar segment margin have to increase for the grill's income to be at least as high as it is now?
(b)	What other considerations will Billy want to consider before making the decision to eliminate the billiards unit to expand the bar area?

Question content area bottom

Part 1

Requirement (a) Ignoring remodeling costs, by how much will the bar segment margin have to increase for the grill's income to be at least as high as it is now?

The bar's segment margin will have to increase by

$enter your response here

for the grill's income to be at least as high as it is now.

Part 2

Requirement (b) What other considerations will Billy want to consider before making the decision to eliminate the billiards unit to expand the bar area?

Billy should also consider ................................

a) the effect on the employees earnings

b) the effect on the other two segments revenues

c) the effect on the other two segments taxes.

The ..................................... is not considered in this analysis.

a) employees earnings

b) interactive effect of the three segments

c) tax effect