When Deciding Whether to Discontinue a Segment of a Business

question 108

Multiple Choice

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

• A)equipment used by that segment that could become idle
• B)reallocation of corporate costs
• C)how total costs differ among alternatives
• D)operating income per unit of the discontinued segment

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Definitions:

Cognitive Dissonance Theory

A theory suggesting that individuals experience mental discomfort and psychological stress when holding two or more contradictory beliefs, values, or attitudes.

Attribution Theory

A psychological theory that explains how individuals pinpoint the causes of their own and others' behavior and events.

Equity Theory

A theory in social psychology that proposes individuals assess the fairness of their relationships by analyzing their input and outcome ratios to those of others.

Philip Zimbardo

An American psychologist best known for his leadership of the Stanford Prison Experiment and contributions to the understanding of social psychology.