Question
Rachel's Restaurant evaluates the profitability of three segments: dining, takeout, and catering. The financials are: Segment Revenue Direct Costs Dining $600,000 $400,000 Takeout $200,000 $120,000
Rachel's Restaurant evaluates the profitability of three segments: dining, takeout, and catering. The financials are:
Segment | Revenue | Direct Costs |
Dining | $600,000 | $400,000 |
Takeout | $200,000 | $120,000 |
Catering | $80,000 | $50,000 |
Rachel is considering converting the catering area into an expanded takeout section.
Required: a. Calculate the required increase in the takeout segment margin to maintain Rachel’s Restaurant’s current income. b. Identify other considerations Rachel should take into account before deciding to eliminate the catering segment to expand takeout.
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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
