When deciding whether to discontinue a segment of a business,managers should focus on:
A)unavoidable fixed costs.
B)reallocation of corporate costs.
C)contribution margin and avoidable fixed costs of the segment.
D)operating income per unit of the discontinued segment.

Question

Quizplus · Accepted Answer

Managers should focus on the contribution margin and avoidable fixed costs of the segment when deciding whether to discontinue it. Contribution margin will help determine if the segment is profitable and fixed costs that can be avoided when the segment is discontinued. This will help in making an informed decision based on the financial impact of shutting down the segment.

When Deciding Whether to Discontinue a Segment of a Business,managers