Segment margin income statements are most useful to managers when they are prepared
A)on a cash basis.
B)using a segment contribution margin basis.
C)on a GAAP basis.
D)based on function.

Question

Quizplus · Accepted Answer

Segment margin income statements are prepared using a segment contribution margin basis, which separates fixed and variable costs and calculates the contribution margin for each segment. This helps managers make informed decisions about which segments to invest in and which to cut back on. Cash basis and GAAP basis are different accounting methods used for financial reporting, while function-based income statements group expenses based on their functional category (such as marketing, production, and administration) rather than by segment.

Segment Margin Income Statements Are Most Useful to Managers When