George's Grill evaluates the profitability of three segments: restaurant, bar, and billiards. The financials are:SegmentRevenueDirect CostsRestaurant$320,000$200,000Bar$150,000$60,000Billiards$40,000$25,000George...
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Accounting
George's Grill evaluates the profitability of three segments: restaurant, bar, and billiards. The financials are:
Segment | Revenue | Direct Costs |
Restaurant | $320,000 | $200,000 |
Bar | $150,000 | $60,000 |
Billiards | $40,000 | $25,000 |
George is considering converting the billiards area into an expanded bar area.
Required: a. Based on segment margin analysis, by how much will the bar segment margin have to increase for the grill’s income to be at least as high as it is now? b. What other considerations will George want to consider before making the decision to eliminate billiards to expand the bar area?
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