Multiple Choice
How should that portion of fixed costs that are unavoidable be handled when making a decision on whether to eliminate an unprofitable segment?
A) They should be subtracted from the contribution margin and if that results in a net loss, the segment should be eliminated.
B) They should not be considered as they are not relevant.
C) They should be allocated to other segments.If that causes a loss in another segment, that segment should be eliminated as well.
D) Fixed costs are never relevant.
Correct Answer:
Verified
Correct Answer:
Verified
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