Question
Lisa's Library evaluates the profitability of three segments: books, cafe, and events. The financials are: Segment Revenue Direct Costs Books $600,000 $360,000 Cafe $200,000 $120,000
Lisa's Library evaluates the profitability of three segments: books, cafe, and events. The financials are:
Segment | Revenue | Direct Costs |
Books | $600,000 | $360,000 |
Cafe | $200,000 | $120,000 |
Events | $80,000 | $50,000 |
Lisa is considering converting the events area into an expanded books area.
Required: a. Calculate the necessary increase in the books segment margin to maintain Lisa’s Library’s current income. b. Identify other considerations Lisa should evaluate before deciding to eliminate the events area to expand books.
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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
978-0137024971
