When Deciding Whether to Discontinue a Segment of a Business

Multiple Choice

When deciding whether to discontinue a segment of a business, managers should focus on:

A) The amount of operating income per unit produced by the segment.
B) The amount of contribution margin per direct labor hour in the segment.
C) How corporate-level administrative costs would be redistributed if the segment were eliminated.
D) The cost of equipment from the segment that could go idle if the segment were discontinued.
E) The total contribution margin generated by the segment relative to any traceable (avoidable) fixed costs associated with the segment.