One Reason for a Company to Spin-Off a Division Is

question 6

Multiple Choice

One reason for a company to spin-off a division is to ____.

• A) consolidate expenses
• B) remove an underperforming unit
• C) create a better distribution unit
• D) achieve synergy

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Definitions:

Marginal Cost

The increase in cost resulting from the production of one additional unit of a good.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a company.

AVC

Average Variable Cost, which refers to the total variable cost per unit of output in a business, where variable costs change with the level of production.

MC

Marginal Cost, the cost of producing one additional unit of a product or service.