Question
Sophia's Spa evaluates the profitability of three segments: massages, facials, and yoga classes. The financials are: Segment Revenue Direct Costs Massages $500,000 $300,000 Facials $200,000
Sophia's Spa evaluates the profitability of three segments: massages, facials, and yoga classes. The financials are:
Segment | Revenue | Direct Costs |
Massages | $500,000 | $300,000 |
Facials | $200,000 | $120,000 |
Yoga Classes | $80,000 | $50,000 |
Sophia is considering converting the yoga classes area into an expanded massages area.
Required: a. Calculate the necessary increase in the massages segment margin to maintain Sophia’s Spa’s current income. b. Identify other considerations Sophia should evaluate before deciding to eliminate the yoga classes area to expand massages.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
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
