Which of the following are reasons to continue an unprofitable business segment?
A) Potential loss of related business
B) Lack of alternative source of part needed in production
C) Fixed cost application to the segment that exceeds the level of the accounting loss
D) All of the above
E) None of the above

Question

Quizplus · Accepted Answer

All the options listed are valid reasons to continue an unprofitable business segment. A) Potential loss of related business indicates that discontinuing the segment could negatively impact other profitable areas. B) Lack of alternative source of part needed in production suggests that the segment is critical for the overall production process. C) Fixed cost application to the segment that exceeds the level of the accounting loss implies that the segment's discontinuation wouldn't necessarily result in cost savings equal to or greater than the loss it's currently generating, due to fixed costs that would remain.

Which of the Following Are Reasons to Continue an Unprofitable