Tina's Toys evaluates the profitability of three segments: action figures, dolls, and board games. The financials...
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Accounting
Tina's Toys evaluates the profitability of three segments: action figures, dolls, and board games. The financials are:
Segment
Revenue
Direct Costs
Action Figures
$500,000
$300,000
Dolls
$200,000
$120,000
Board Games
$80,000
$50,000
Tina is considering converting the board games area into an expanded action figures area.
Required: a. By how much must the action figures segment margin increase to maintain Tina’s Toys’ current income? b. Discuss other factors Tina should consider before deciding to eliminate the board games area to expand action figures.
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