Mia's Music Store is analyzing the profitability of three segments: instruments, lessons, and accessories. The financials...
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Accounting
Mia's Music Store is analyzing the profitability of three segments: instruments, lessons, and accessories. The financials are:
Segment
Revenue
Direct Costs
Instruments
$500,000
$300,000
Lessons
$200,000
$120,000
Accessories
$80,000
$50,000
Mia is considering converting the accessories area into an expanded instruments area.
Required: a. Determine the necessary increase in the instruments segment margin to maintain Mia’s Music Store’s current income. b. Identify other considerations Mia should evaluate before deciding to eliminate the accessories area to expand instruments.
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