Which of the Following Statements Describes a Scenario When Management

question 147

Multiple Choice

Which of the following statements describes a scenario when management should consider dropping a business division?

• A) The division has consistently reported an operating loss.
• B) The division's avoidable fixed costs are less than its contribution margin.
• C) The division's avoidable fixed costs are greater than its contribution margin.
• D) The division's unavoidable fixed costs are greater than its operating loss.

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Definitions:

Headright System

A land-grant policy that promised fifty acres to any colonist who could afford passage to Virginia, as well as fifty more for any accompanying servants. The headright policy was eventually expanded to include any colonists—and was also adopted in other colonies.

Large Estates

Expansive areas of land, usually encompassing significant homes or mansions, often associated with wealth and aristocracy.

Indentured Servants

Individuals who were bound by contract to serve another person for a specified period of time in exchange for passage to America, training, or other benefits, common in the 17th and 18th centuries.

Fondness for Freedom

A strong preference or affection towards liberty and the right to act, speak, or think as one wants without hindrance or restraint.