Question
Rachel's Restaurant analyzes profitability of three segments: breakfast, lunch, and dinner. The financials are: Segment Revenue Direct Costs Breakfast $400,000 $240,000 Lunch $200,000 $120,000 Dinner
Rachel's Restaurant analyzes profitability of three segments: breakfast, lunch, and dinner. The financials are:
Segment | Revenue | Direct Costs |
Breakfast | $400,000 | $240,000 |
Lunch | $200,000 | $120,000 |
Dinner | $80,000 | $50,000 |
Rachel is considering converting the dinner area into an expanded lunch area.
Required: a. Calculate the necessary increase in the lunch segment margin to maintain Rachel’s Restaurant’s current income. b. Identify other considerations Rachel should evaluate before deciding to eliminate the dinner area to expand lunch.
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Business Statistics A Decision Making Approach
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry
9th Edition
013302184X, 978-0133021844
