Question
Laura's Lingerie is assessing profitability of three segments: bras, panties, and sleepwear. The financial data are: Segment Revenue Direct Costs Bras $300,000 $180,000 Panties $150,000
Laura's Lingerie is assessing profitability of three segments: bras, panties, and sleepwear. The financial data are:
Segment | Revenue | Direct Costs |
Bras | $300,000 | $180,000 |
Panties | $150,000 | $90,000 |
Sleepwear | $70,000 | $40,000 |
Laura is considering converting the sleepwear area into an expanded bras area.
Required: a. Determine the necessary increase in the bras segment margin to maintain Laura’s Lingerie’s current income. b. Discuss other factors Laura should consider before deciding to eliminate the sleepwear area to expand the bras area.
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Fundamentals of Financial Accounting
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh
4th Canadian edition
978-1259269868, 978-1259103292
