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Lucas' Lounge analyzes profitability of three segments: live music, bar, and private events. The financial details...

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Accounting

Lucas' Lounge analyzes profitability of three segments: live music, bar, and private events. The financial details are:

Segment

Revenue

Direct Costs

Live Music

$350,000

$220,000

Bar

$180,000

$100,000

Private Events

$90,000

$50,000

Lucas is thinking of converting the private events space into an expanded bar area.

Required: a. How much does the bar segment margin need to increase to ensure Lucas' Lounge’s income remains the same? b. What other considerations should Lucas review before eliminating the private events space to expand the bar area?

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