Paul's Pub is analyzing profitability of three segments: dining, drinks, and events. The financials are:SegmentRevenueDirect CostsDining$450,000$280,000Drinks$220,000$130,000Events$90,000$50,000Paul...
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Accounting
Paul's Pub is analyzing profitability of three segments: dining, drinks, and events. The financials are:
Segment
Revenue
Direct Costs
Dining
$450,000
$280,000
Drinks
$220,000
$130,000
Events
$90,000
$50,000
Paul is considering converting the events area into an expanded dining area.
Required: a. By how much must the dining segment margin increase to keep Paul’s Pub’s income unchanged? b. What other factors should Paul consider before deciding to eliminate the events area to expand dining?
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