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.

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Definitions:

Values Education

The educational process by which individuals develop moral and ethical values.

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The urge to immediately satisfy cravings for enjoyment or satisfaction.

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