How Should That Portion of Fixed Costs That Are Unavoidable

question 20

Multiple Choice

How should that portion of fixed costs that are unavoidable be handled when making a decision on whether to eliminate an unprofitable segment?

• A)They should be subtracted from the contribution margin and if that results in a net loss, the segment should be eliminated.
• B)They should not be considered as they are not relevant.
• C)They should be allocated to other segments.If that causes a loss in another segment, that segment should be eliminated as well.
• D)Fixed costs are never relevant.

---

Definitions:

Agents

Representatives or intermediaries who act on behalf of others, often in business or professional contexts, to facilitate transactions or communications.

Actors

Individuals who perform in theater, film, television, or other mediums, portraying characters and conveying stories through their performances.

Vocational Guidance

A process of helping individuals understand their skills, interests, and values to make informed educational, career, and employment decisions.

Career Counseling

A guidance process that helps individuals understand themselves and the world of work in order to make career, educational, and life decisions.