Question
Jake's Juice Bar evaluates the profitability of three segments: smoothies, juices, and snacks. The financials are: Segment Revenue Direct Costs Smoothies $300,000 $180,000 Juices $150,000
Jake's Juice Bar evaluates the profitability of three segments: smoothies, juices, and snacks. The financials are:
Segment | Revenue | Direct Costs |
Smoothies | $300,000 | $180,000 |
Juices | $150,000 | $90,000 |
Snacks | $70,000 | $40,000 |
Jake is considering converting the snacks area into an expanded smoothies area.
Required: a. By how much must the smoothies segment margin increase to maintain Jake’s Juice Bar’s current income? b. Discuss other factors Jake should consider before deciding to eliminate the snacks area to expand smoothies.
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh
4th Canadian edition
978-1259269868, 978-1259103292
