George's Garden analyzes profitability of three segments: plants, pots, and fertilizers. The financials are:SegmentRevenueDirect CostsPlants$400,000$240,000Pots$150,000$90,000Fertilizers$70,000$40,000George is...
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Accounting
George's Garden analyzes profitability of three segments: plants, pots, and fertilizers. The financials are:
Segment | Revenue | Direct Costs |
Plants | $400,000 | $240,000 |
Pots | $150,000 | $90,000 |
Fertilizers | $70,000 | $40,000 |
George is considering converting the fertilizers area into an expanded plants area.
Required: a. By how much must the plants segment margin increase to maintain George’s Garden’s current income? b. Discuss other factors George should consider before deciding to eliminate the fertilizers area to expand plants.
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