Nina's Nook analyzes profitability of three segments: gifts, home decor, and clothing. The financials are:SegmentRevenueDirect CostsGifts$300,000$180,000Home...
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Accounting
Nina's Nook analyzes profitability of three segments: gifts, home decor, and clothing. The financials are:
Segment | Revenue | Direct Costs |
Gifts | $300,000 | $180,000 |
Home Decor | $150,000 | $90,000 |
Clothing | $70,000 | $40,000 |
Nina is considering converting the clothing area into an expanded gifts area.
Required: a. Calculate the necessary increase in the gifts segment margin to maintain Nina’s Nook’s current income. b. Identify other considerations Nina should evaluate before deciding to eliminate the clothing area to expand gifts.
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