When Deciding Whether to Eliminate a Segment, the Segment Should

question 105

True/False

When deciding whether to eliminate a segment, the segment should be dropped if its contribution margin less the avoidable fixed costs is positive.

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Definitions:

Unrealized Loss

A decrease in the value of an investment or asset that has not been sold, thus the loss has not been realized or converted into an actual loss.

Fair Value

The price at which an asset would be bought or sold in an orderly transaction between market participants at the measurement date.

Trading Investments

Securities bought and sold for the purpose of profiting from short-term price fluctuations.