Chris's Coffee evaluates the profitability of three segments: coffee, pastries, and sandwiches. The financials are:SegmentRevenueDirect CostsCoffee$400,000$240,000Pastries$200,000$120,000Sandwiches$90,000$50,000Chris...
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Accounting
Chris's Coffee evaluates the profitability of three segments: coffee, pastries, and sandwiches. The financials are:
Segment
Revenue
Direct Costs
Coffee
$400,000
$240,000
Pastries
$200,000
$120,000
Sandwiches
$90,000
$50,000
Chris is considering converting the sandwiches area into an expanded coffee area.
Required: a. By how much must the coffee segment margin increase to maintain Chris’s Coffee’s current income? b. Discuss other factors Chris should consider before deciding to eliminate the sandwiches area to expand coffee.
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