Question
Lucas's Lounge evaluates the profitability of three segments: bar, dining, and events. The financials are: Segment Revenue Direct Costs Bar $500,000 $300,000 Dining $200,000 $120,000
Lucas's Lounge evaluates the profitability of three segments: bar, dining, and events. The financials are:
Segment | Revenue | Direct Costs |
Bar | $500,000 | $300,000 |
Dining | $200,000 | $120,000 |
Events | $90,000 | $50,000 |
Lucas is considering converting the events area into an expanded dining area.
Required: a. By how much must the dining segment margin increase to maintain Lucas’s Lounge’s current income? b. Discuss other factors Lucas should consider before deciding to eliminate the events area to expand dining.
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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
