Question
Tom's Tavern evaluates the profitability of three segments: bar, dining, and events. The financials are: Segment Revenue Direct Costs Bar $500,000 $300,000 Dining $200,000 $120,000
Tom's Tavern evaluates the profitability of three segments: bar, dining, and events. The financials are:
Segment | Revenue | Direct Costs |
Bar | $500,000 | $300,000 |
Dining | $200,000 | $120,000 |
Events | $90,000 | $50,000 |
Tom is considering converting the events area into an expanded dining area.
Required: a. By how much must the dining segment margin increase to maintain Tom’s Tavern’s current income? b. Discuss other factors Tom should consider before deciding to eliminate the events area to expand dining.
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Financial Reporting And Analysis
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
8th Edition
1260247848, 978-1260247848
