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Ella's Eatery evaluates the profitability of three segments: breakfast, lunch, and dinner. The financials are:SegmentRevenueDirect CostsBreakfast$400,000$240,000Lunch$200,000$120,000Dinner$80,000$50,000Ella...

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Accounting

Ella's Eatery evaluates the profitability of three segments: breakfast, lunch, and dinner. The financials are:

Segment

Revenue

Direct Costs

Breakfast

$400,000

$240,000

Lunch

$200,000

$120,000

Dinner

$80,000

$50,000

Ella is considering converting the dinner area into an expanded lunch area.

Required: a. By how much must the lunch segment margin increase to maintain Ella’s Eatery’s current income? b. Discuss other factors Ella should consider before deciding to eliminate the dinner area to expand lunch.

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