Segment Margin Is a Better Measure of the Long-Run Profitability

question 10

True/False

Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

---

Definitions:

Job Order Costing

A cost accounting system in which costs are assigned to specific jobs or batches, typical in companies that produce unique products or jobs.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to products based on a relevant driver.

Machine Hours

A unit of measure representing the operation time of machines in manufacturing or production processes.

Indirect Materials

Materials used in the production process that are not directly traceable to the finished product, such as lubricants and cleaning supplies.