Nancy's Nail Salon evaluates the profitability of three segments: manicures, pedicures, and nail art. The revenue...
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Accounting
Nancy's Nail Salon evaluates the profitability of three segments: manicures, pedicures, and nail art. The revenue and direct costs are:
Segment | Revenue | Direct Costs |
Manicures | $200,000 | $120,000 |
Pedicures | $100,000 | $60,000 |
Nail Art | $50,000 | $30,000 |
Nancy is considering converting the nail art area into an expanded pedicure area.
Required: a. Calculate the increase in the pedicure segment margin needed to maintain Nancy’s Nail Salon’s current income. b. What other considerations should Nancy account for before eliminating the nail art area to expand the pedicure area?
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