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Lily's Library analyzes profitability of three segments: book sales, café, and events. The financials are:SegmentRevenueDirect CostsBook...

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Accounting

Lily's Library analyzes profitability of three segments: book sales, café, and events. The financials are:

Segment

Revenue

Direct Costs

Book Sales

$600,000

$360,000

Café

$150,000

$90,000

Events

$80,000

$50,000

Lily is contemplating turning the events area into an expanded café area.

Required: a. Calculate the necessary increase in the café segment margin to maintain Lily’s Library’s current income. b. Identify other considerations Lily should evaluate before deciding to eliminate the events area to expand the café area.

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