Reference no: EM13480183

Dropping a segment - George's Grill analyzes profitability of three operating units: restaurant, bar, and billiards room.  Revenues, variable costs, and attributable fixed costs (which can be avoided if the unit is eliminated) for each unit are as follows:

__________________________Restaurant                                    Bar                                         Billiards Rm        

Revenue                                       $320,000                                   $150,000                                   $40,000

Variable costs                               120,000                                     35,000                                       10,000

Attributable fixed costs                  80,000                                     25,000                                        15,000                 

George the owner, is considering converting the billiards area into an expanded bar area.

a)Ignoring remodeling costs, by how much will the bar segment margin have to increase for the grill's income to be at least as high as it is now?

b)What other considerations will George want to consider before making the decision to eliminate the billiards unit to expand the bar area?