Chris's Clothing evaluates the profitability of three segments: men's wear, women's wear, and children's wear. The...
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Accounting
Chris's Clothing evaluates the profitability of three segments: men's wear, women's wear, and children's wear. The financials are:
Segment | Revenue | Direct Costs |
Men's Wear | $400,000 | $240,000 |
Women's Wear | $200,000 | $120,000 |
Children's Wear | $80,000 | $50,000 |
Chris is considering converting the children's wear area into an expanded men's wear area.
Required: a. By how much must the men's wear segment margin increase to maintain Chris’s Clothing’s current income? b. Discuss other factors Chris should consider before deciding to eliminate the children's wear area to expand men's wear.
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