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Hannah's Hardware is analyzing the profitability of three segments: tools, paint, and garden supplies. The financials...

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Accounting

Hannah's Hardware is analyzing the profitability of three segments: tools, paint, and garden supplies. The financials are:

Segment

Revenue

Direct Costs

Tools

$600,000

$360,000

Paint

$150,000

$90,000

Garden Supplies

$70,000

$40,000

Hannah is contemplating turning the garden supplies area into an expanded tools area.

Required: a. Determine the necessary increase in the tools segment margin to maintain Hannah’s Hardware’s current income. b. Discuss other considerations Hannah should evaluate before deciding to eliminate the garden supplies area to expand tools.

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