1. Big Bucks Casino is currently operating at 80 percent capacity. Worried about the casino's...
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1. Big Bucks Casino is currently operating at 80 percent capacity. Worried about the casino's performance, Grey, the general manager, reviewed the company's operating performance. Following are revenue and cost data relating to Big Bucks Casino, in millions of dollars:
Segment
Card Tables Slots Craps Roulette
Sales Rs.1,250 Rs,2,500 Rs.750Rs.1,750
Less variable costs 600 1,000 450 750
Contribution marginRs.650 Rs.1,500 Rs.300Rs.1,000
Less fixed costs 400 750 400 500
Operating profit (loss) Rs.250 Rs.750Rs.(100) Rs.500
A. What is the current operating profit for the company as a whole?
B. Assume that all fixed costs are unavoidable. If Grey eliminated the unprofitable segments, what would be the new operating profit for the company as a whole?
C. What options does management have to maximize profits?
D. What qualitative factors do you think management should consider before making this decision? What impact could these qualitative factors have on the decision?
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