From a Quantitative Standpoint a Segment Should Be Eliminated If

question 171

True/False

From a quantitative standpoint a segment should be eliminated if its contribution margin is less than the fixed costs that can be eliminated.

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Definitions:

Raw Materials

Unprocessed or primary substances used in manufacturing to create finished goods.

Retained Earnings

Retained earnings represent the accumulated net income of a company that has not been distributed to shareholders as dividends but is reinvested in the business.

FOH Volume Variance

A measurement in managerial accounting that compares the budgeted factory overhead for actual production volumes against the applied factory overhead based on standard costing.

FOH Budget Variance

The difference between the actual factory overhead costs incurred and the overhead costs allocated to production based on budgeted rates.