Ella's Electronics evaluates the profitability of three segments: computers, phones, and accessories. The financials are:SegmentRevenueDirect CostsComputers$500,000$300,000Phones$200,000$120,000Accessories$80,000$50,000Ella...
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Accounting
Ella's Electronics evaluates the profitability of three segments: computers, phones, and accessories. The financials are:
Segment
Revenue
Direct Costs
Computers
$500,000
$300,000
Phones
$200,000
$120,000
Accessories
$80,000
$50,000
Ella is considering converting the accessories area into an expanded computers area.
Required: a. By how much must the computers segment margin increase to maintain Ella’s Electronics’ current income? b. Discuss other factors Ella should consider before deciding to eliminate the accessories area to expand computers.
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