A Company Should

question 57

Multiple Choice

A company should

• A)eliminate any segment in which the contribution margin is less than the fixed costs that are unavoidable.
• B)eliminate an unprofitable product line as it will always increase the total profits of a company.
• C)eliminate an unprofitable product as fixed expenses allocated to the eliminated segment will likely be eliminated.
• D)identify the relevant costs in deciding whether to eliminate an unprofitable segment.

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Definitions:

Raffle Tickets

Tickets sold as a means to raise money for a cause, with the chance of winning prizes.

Binomial Distribution

a probability distribution describing the number of successes in a fixed number of independent Bernoulli trials, with a constant probability of success.

Bernoulli Experiment

A random experiment with exactly two possible outcomes, often termed success and failure.

Probability Density Function

A Probability Density Function (PDF) is a function that describes the relative likelihood for a continuous random variable to take on a given value.