In a Decision Relating to the Possible Elimination of a Department

question 61

Multiple Choice

In a decision relating to the possible elimination of a department consideration needs to be given to all of the following except:

• A) unavoidable expenses.
• B) alternative uses of the space currently occupied.
• C) whether all of the direct operating expenses are avoidable.
• D) adverse effects of the elimination on sales of other departments.

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Definitions:

Operating Costs

The expenses related to the normal day-to-day running of a business, including rent, salaries, and utilities.

Traceable Fixed Expense

Fixed expenses specifically attributable to a particular section of a business or an operation.

Price Reduction

A strategy involving the lowering of the selling price of products or services, typically to attract more customers or respond to market competition.

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific cost center or business segment.