Lucas's Lounge evaluates the profitability of three segments: bar, dining, and events. The financials are:SegmentRevenueDirect CostsBar$500,000$300,000Dining$200,000$120,000Events$90,000$50,000Lucas...
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Accounting
Lucas's Lounge evaluates the profitability of three segments: bar, dining, and events. The financials are:
Segment | Revenue | Direct Costs |
Bar | $500,000 | $300,000 |
Dining | $200,000 | $120,000 |
Events | $90,000 | $50,000 |
Lucas is considering converting the events area into an expanded dining area.
Required: a. By how much must the dining segment margin increase to maintain Lucas’s Lounge’s current income? b. Discuss other factors Lucas should consider before deciding to eliminate the events area to expand dining.
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