Question
Mia's Music Store is analyzing the profitability of three segments: instruments, lessons, and accessories. The financials are: Segment Revenue Direct Costs Instruments $500,000 $300,000 Lessons
Mia's Music Store is analyzing the profitability of three segments: instruments, lessons, and accessories. The financials are:
Segment | Revenue | Direct Costs |
Instruments | $500,000 | $300,000 |
Lessons | $200,000 | $120,000 |
Accessories | $80,000 | $50,000 |
Mia is considering converting the accessories area into an expanded instruments area.
Required: a. Determine the necessary increase in the instruments segment margin to maintain Mia’s Music Store’s current income. b. Identify other considerations Mia should evaluate before deciding to eliminate the accessories area to expand instruments.
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Cost Management Measuring Monitoring And Motivating Performance
Authors: Leslie G. Eldenburg, Susan Wolcott, Liang Hsuan Chen, Gail Cook
2nd Canadian Edition
1118168879, 9781118168875
