Liam's Landscaping evaluates the profitability of three segments: maintenance, design, and installations. The financials are:SegmentRevenueDirect CostsMaintenance$300,000$180,000Design$150,000$90,000Installations$70,000$40,000Liam...
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Accounting
Liam's Landscaping evaluates the profitability of three segments: maintenance, design, and installations. The financials are:
Segment | Revenue | Direct Costs |
Maintenance | $300,000 | $180,000 |
Design | $150,000 | $90,000 |
Installations | $70,000 | $40,000 |
Liam is considering converting the installations area into an expanded design area.
Required: a. By how much must the design segment margin increase to maintain Liam’s Landscaping’s current income? b. Discuss other factors Liam should consider before deciding to eliminate the installations area to expand design.
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