Emma's Emporium analyzes profitability of three segments: clothing, accessories, and home goods. The financials are:SegmentRevenueDirect CostsClothing$400,000$240,000Accessories$150,000$90,000Home...
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Accounting
Emma's Emporium analyzes profitability of three segments: clothing, accessories, and home goods. The financials are:
Segment
Revenue
Direct Costs
Clothing
$400,000
$240,000
Accessories
$150,000
$90,000
Home Goods
$70,000
$40,000
Emma is considering converting the home goods area into an expanded clothing area.
Required: a. Determine the necessary increase in the clothing segment margin to maintain Emma’s Emporium’s current income. b. Discuss other considerations Emma should evaluate before deciding to eliminate the home goods area to expand clothing.
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