When Deciding Whether to Discontinue a Segment of a Business

question 117

Multiple Choice

When deciding whether to discontinue a segment of a business, managers should focus on:

• A) The amount of operating income per unit produced by the segment.
• B) The amount of contribution margin per direct labor hour in the segment.
• C) How corporate-level administrative costs would be redistributed if the segment were eliminated.
• D) The cost of equipment from the segment that could go idle if the segment were discontinued.
• E) The total contribution margin generated by the segment relative to any traceable (avoidable) fixed costs associated with the segment.

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Definitions:

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