Question
Nina's Nursery evaluates the profitability of three segments: plants, garden tools, and outdoor furniture. The financials are: Segment Revenue Direct Costs Plants $400,000 $240,000 Garden
Nina's Nursery evaluates the profitability of three segments: plants, garden tools, and outdoor furniture. The financials are:
Segment | Revenue | Direct Costs |
Plants | $400,000 | $240,000 |
Garden Tools | $200,000 | $120,000 |
Outdoor Furniture | $80,000 | $50,000 |
Nina is considering converting the outdoor furniture area into an expanded plants area.
Required: a. By how much must the plants segment margin increase to maintain Nina’s Nursery’s current income? b. Discuss other factors Nina should consider before deciding to eliminate the outdoor furniture area to expand plants.
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Financial Accounting
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
9th Edition
1118334329, 978-1118334324
