Question
Liam's Landscaping evaluates the profitability of three segments: maintenance, design, and installations. The financials are: Segment Revenue Direct Costs Maintenance $300,000 $180,000 Design $150,000 $90,000
Liam's Landscaping evaluates the profitability of three segments: maintenance, design, and installations. The financials are:
Segment | Revenue | Direct Costs |
Maintenance | $300,000 | $180,000 |
Design | $150,000 | $90,000 |
Installations | $70,000 | $40,000 |
Liam is considering converting the installations area into an expanded design area.
Required: a. By how much must the design segment margin increase to maintain Liam’s Landscaping’s current income? b. Discuss other factors Liam should consider before deciding to eliminate the installations area to expand design.
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Accounting for Decision Making and Control
Authors: Jerold Zimmerman
8th edition
78025745, 978-0078025747
