Which of the Following Statements Is True Regarding a Company's

question 29

Multiple Choice

Which of the following statements is true regarding a company's segment margin?

• A) It is primarily used to make short-term decisions such as cost-volume-profit (CVP) analysis and special order decisions.
• B) It ignores all fixed costs.
• C) It is primarily a measure of long-term profitability.
• D) It should not be used to make decisions on whether or not to drop a product line.

---

Definitions:

Intangible Services

Services that cannot be physically touched or stored, such as education, consulting, or legal advice.

Inventory

The quantity of goods that a company has in stock, ready for sale or distribution.

Investment Component

A part of economic activity related to spending on goods and services not for immediate consumption but for future benefit.

Government Purchases Component

The part of gross domestic product (GDP) that includes spending by all levels of government on goods and services.