An Operating Segment Is a Component of a Company

question 58

Multiple Choice

An operating segment is a component of a company

• A)that engages in business activities to earn revenues and incur expenses
• B)whose operating results are regularly reviewed by the company's chief operating officer for budgeting and evaluation purposes
• C)for which financial information is available
• D)all of these choices

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Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product, as the fixed costs are spread over more units of production.

Demand Pooling

A strategy used in supply chain management to reduce variability in demand by aggregating demand across different customers or markets.

Unavoidable Cost

Costs that cannot be eliminated or reduced in the short-term regardless of the level of production or the business activity.

Proportional Rent

Rent expenses that fluctuate based on a predetermined factor, such as sales volume or production levels.