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Tom's Tech evaluates the profitability of three segments: laptops, desktops, and accessories. The financials are:SegmentRevenueDirect CostsLaptops$500,000$300,000Desktops$200,000$120,000Accessories$90,000$50,000Tom...

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Accounting

Tom's Tech evaluates the profitability of three segments: laptops, desktops, and accessories. The financials are:

Segment

Revenue

Direct Costs

Laptops

$500,000

$300,000

Desktops

$200,000

$120,000

Accessories

$90,000

$50,000

Tom is considering converting the accessories area into an expanded laptops area.

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

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