Evan's Entertainment analyzes profitability of three segments: concerts, bar, and merchandise. The financials are:SegmentRevenueDirect CostsConcerts$500,000$300,000Bar$250,000$150,000Merchandise$100,000$60,000Evan is...
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Accounting
Evan's Entertainment analyzes profitability of three segments: concerts, bar, and merchandise. The financials are:
Segment | Revenue | Direct Costs |
Concerts | $500,000 | $300,000 |
Bar | $250,000 | $150,000 |
Merchandise | $100,000 | $60,000 |
Evan is contemplating turning the merchandise area into an expanded bar area.
Required: a. By how much must the bar segment margin increase to keep Evan’s Entertainment’s income unchanged? b. What other factors should Evan consider before deciding to eliminate the merchandise segment to expand the bar area?
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