Tom's Tech Store analyzes profitability of three segments: computers, accessories, and repair services. The financial data...
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Accounting
Tom's Tech Store analyzes profitability of three segments: computers, accessories, and repair services. The financial data are:
Segment | Revenue | Direct Costs |
Computers | $600,000 | $400,000 |
Accessories | $250,000 | $150,000 |
Repair Services | $100,000 | $60,000 |
Tom is considering converting the accessories area into an expanded repair services area.
Required: a. By how much must the repair services segment margin increase to maintain Tom's Tech Store’s current income? b. What other factors should Tom consider before making the decision to eliminate the accessories segment to expand repair services?
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