Question
Lucas' Lounge analyzes profitability of three segments: live music, bar, and private events. The financial details are: Segment Revenue Direct Costs Live Music $350,000 $220,000
Lucas' Lounge analyzes profitability of three segments: live music, bar, and private events. The financial details are:
Segment | Revenue | Direct Costs |
Live Music | $350,000 | $220,000 |
Bar | $180,000 | $100,000 |
Private Events | $90,000 | $50,000 |
Lucas is thinking of converting the private events space into an expanded bar area.
Required: a. How much does the bar segment margin need to increase to ensure Lucas' Lounge’s income remains the same? b. What other considerations should Lucas review before eliminating the private events space to expand the bar area?
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Using Financial Accounting Information The Alternative to Debits and Credits
Authors: Gary A. Porter, Curtis L. Norton
9th edition
978-1285183244, 128518324X, 978-1285779263, 1285779266, 978-1285183237
