Pete's Pet Shop is assessing the profitability of three segments: pet supplies, grooming, and boarding. The...
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Accounting
Pete's Pet Shop is assessing the profitability of three segments: pet supplies, grooming, and boarding. The financial data are:
Segment
Revenue
Direct Costs
Pet Supplies
$300,000
$180,000
Grooming
$120,000
$70,000
Boarding
$90,000
$60,000
Pete is considering converting the boarding area into an expanded grooming area.
Required: a. By how much must the grooming segment margin increase to keep Pete's Pet Shop’s income unchanged? b. Discuss other factors Pete should consider before deciding to eliminate the boarding area to expand grooming.
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