Fixed Expenses That Cannot Be Directly Traced to Individual Segments

question 163

Multiple Choice

Fixed expenses that cannot be directly traced to individual segments are called

• A) cost structure.
• B) direct fixed expenses.
• C) operating leverage.
• D) common fixed expenses.
• E) indifference point.

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Definitions:

Unprofitable Segment

A division or part of a company that does not generate profit and may result in a financial loss for the company.

Cost of Capital

The required return necessary to make a capital budgeting project, such as building a new factory or investing in new equipment, worthwhile.

Equity Funds

Investment funds that primarily invest in stocks, aiming to provide investors with growth or income through dividends and capital gains.

Borrowed Funds

Money that an entity obtains from another party with the promise to return the principal amount along with interest.