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Lucas's Luggage evaluates the profitability of three segments: suitcases, backpacks, and accessories. The financials are:SegmentRevenueDirect CostsSuitcases$400,000$240,000Backpacks$200,000$120,000Accessories$80,000$50,000Lucas...

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Accounting

Lucas's Luggage evaluates the profitability of three segments: suitcases, backpacks, and accessories. The financials are:

Segment

Revenue

Direct Costs

Suitcases

$400,000

$240,000

Backpacks

$200,000

$120,000

Accessories

$80,000

$50,000

Lucas is considering converting the accessories area into an expanded suitcases area.

Required: a. By how much must the suitcases segment margin increase to maintain Lucas’s Luggage’s current income? b. Discuss other factors Lucas should consider before deciding to eliminate the accessories area to expand suitcases.

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