Question
Nina's Nails evaluates the profitability of three segments: manicures, pedicures, and nail art. The financials are: Segment Revenue Direct Costs Manicures $400,000 $240,000 Pedicures $200,000
Nina's Nails evaluates the profitability of three segments: manicures, pedicures, and nail art. The financials are:
Segment | Revenue | Direct Costs |
Manicures | $400,000 | $240,000 |
Pedicures | $200,000 | $120,000 |
Nail Art | $80,000 | $50,000 |
Nina is considering converting the nail art area into an expanded pedicures area.
Required: a. By how much must the pedicures segment margin increase to maintain Nina’s Nails’ current income? b. Discuss other factors Nina should consider before deciding to eliminate the nail art area to expand pedicures.Step by Step Solution
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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
