Managers Should Discontinue a Business If Its Contribution Margin Is

question 127

Multiple Choice

Managers should discontinue a business if its contribution margin is less than the sum of:

• A) Relevant fixed costs and opportunity costs
• B) Relevant fixed costs and sunk costs
• C) Relevant opportunity costs and sunk costs
• D) Relevant opportunity costs and profits

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Definitions:

Common Shares

Equity securities that represent ownership in a company, entitling holders to vote at shareholder meetings and receive dividends.

Investment

The allocation of resources, usually money, into assets or endeavors expected to generate income or profit over time.

Purchase Consideration

The total value transferred by an acquirer to purchase another company, including cash, securities, and other assets or liabilities undertaken.

NCI

Non-Controlling Interest, which represents the portion of equity in a subsidiary not owned by the parent company, showing the equity interest of minority shareholders.