Oliver's Optics is assessing the profitability of three segments: glasses, sunglasses, and contact lenses. The financials...
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Accounting
Oliver's Optics is assessing the profitability of three segments: glasses, sunglasses, and contact lenses. The financials are:
Segment | Revenue | Direct Costs |
Glasses | $400,000 | $240,000 |
Sunglasses | $150,000 | $90,000 |
Contact Lenses | $80,000 | $50,000 |
Oliver is considering converting the contact lenses area into an expanded sunglasses area.
Required: a. Calculate the necessary increase in the sunglasses segment margin to maintain Oliver’s Optics’ current income. b. Identify other considerations Oliver should evaluate before deciding to eliminate the contact lenses area to expand sunglasses.
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