When Considering Whether or Not to Drop a Market Segment

question 90

Multiple Choice

When considering whether or not to drop a market segment of a business, past costs that CANNOT be recovered regardless of whether the segment is dropped are:

• A) Opportunity costs
• B) Variable costs
• C) Sunk costs
• D) Relevant costs

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows additional funds.

Payments

Transactions wherein money is transferred from one party to another, typically in exchange for goods or services.

Borrowing Rate

The interest rate applied to loans and borrowings taken by a company or an individual.

Note Payable

A written promise to pay a certain amount of money, usually with interest, at a future date or over a period of time.