Segment Margin and Profit Margin Are Identical Terms

question 9

True/False

Segment margin and profit margin are identical terms.The segment margin includes only those costs that are within the segment manager's control whereas the profit margin includes costs that are not controllable by the manager.

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Definitions:

Replacement Cost

The current cost of replacing an asset with a similar new asset at prevailing market prices.

Cost Flow Method

An accounting technique used to value inventory by determining how costs move through different accounts.

Gross Profit Method

An inventory valuation method estimating the cost of goods sold and ending inventory based on gross margin percentages.

Gross Profit Ratio

A metric that shows the proportion of money left over from revenues after accounting for the cost of goods sold.