What are direct fixed costs in multiple-product analysis?

Question

Quizplus · Accepted Answer

Direct fixed costs are those costs that can be traced to each segment and would be avoided if the segment did not exist. This definition fits option D. Options A and C mention fixed costs that are not traceable to segments, which are defined as common fixed costs. Option B mentions fixed costs that can be traced to segments but would remain even if one of the segments were eliminated, which are defined as allocated fixed costs.

What Are Direct Fixed Costs in Multiple-Product Analysis