Holly's Home Goods evaluates the profitability of three segments: furniture, decor, and kitchenware. The financials are:SegmentRevenueDirect...
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Accounting
Holly's Home Goods evaluates the profitability of three segments: furniture, decor, and kitchenware. The financials are:
Segment | Revenue | Direct Costs |
Furniture | $600,000 | $360,000 |
Decor | $200,000 | $120,000 |
Kitchenware | $80,000 | $50,000 |
Holly is considering converting the kitchenware area into an expanded furniture area.
Required: a. By how much must the furniture segment margin increase to maintain Holly’s Home Goods’ current income? b. Discuss other factors Holly should consider before deciding to eliminate the kitchenware area to expand furniture.
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