Question
Sam's Sports is analyzing the profitability of three segments: equipment, apparel, and training. The financials are: Segment Revenue Direct Costs Equipment $500,000 $300,000 Apparel $200,000
Sam's Sports is analyzing the profitability of three segments: equipment, apparel, and training. The financials are:
Segment | Revenue | Direct Costs |
Equipment | $500,000 | $300,000 |
Apparel | $200,000 | $120,000 |
Training | $80,000 | $50,000 |
Sam is considering converting the training area into an expanded equipment area.
Required: a. Calculate the increase in the equipment segment margin needed to maintain Sam’s Sports’ current income. b. What other considerations should Sam take into account before deciding to eliminate the training area to expand equipment?
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Cost Management Measuring Monitoring And Motivating Performance
Authors: Leslie G. Eldenburg, Susan K. Wolcott
2nd Edition
978-0-470-7694, 0470769424, 978-0470769423
