Rachel's Restaurant evaluates the profitability of three segments: dining, takeout, and catering. The financials are:SegmentRevenueDirect CostsDining$600,000$400,000Takeout$200,000$120,000Catering$80,000$50,000Rachel...
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Accounting
Rachel's Restaurant evaluates the profitability of three segments: dining, takeout, and catering. The financials are:
Segment | Revenue | Direct Costs |
Dining | $600,000 | $400,000 |
Takeout | $200,000 | $120,000 |
Catering | $80,000 | $50,000 |
Rachel is considering converting the catering area into an expanded takeout section.
Required: a. Calculate the required increase in the takeout segment margin to maintain Rachel’s Restaurant’s current income. b. Identify other considerations Rachel should take into account before deciding to eliminate the catering segment to expand takeout.
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