The decision to continue or discontinue a segment of the business should focus on:
A)sales minus total variable expenses and total fixed expenses.
B)sales minus total variable expenses and avoidable fixed expenses of the segment.
C)sales minus total variable expenses and allocated fixed expenses of the business.
D)None of the answers are correct.

Question

Quizplus · Accepted Answer

The decision should focus on the contribution margin (sales minus total variable expenses) and the avoidable fixed expenses, as these are the costs that can be eliminated if the segment is discontinued.

The Decision to Continue or Discontinue a Segment of the Business