The document discusses criteria for when a business segment should be discontinued and defines accounting terminology. A segment should be discontinued if its common costs exceed its contribution margin or if it cannot produce a contribution margin. On an income statement prepared with direct costing, the excess of sales over variable costs of goods sold is referred to as the contribution margin.
A segment of a business probably should be discontinued if- (A) it-'s.docx
1. A segment of a business probably should be discontinued if;
(A) it's common costs exceed its contribution margin
(B) it's contribution margin exceeds its controllable fixed cost and it's common costs.
(C) it cannot produce a contribution margin
(D) it has a net loss
On an income statement prepared with direct costing approach, the excess of sales over the cost
of goods sold, based on variable costs only, is referred to as the:
(A) marginal gross profit on sales
(B) manufacturing margin
(C) marginal income on sales
(D) contribution margin
A segment of a business probably should be discontinued if;
(A) it's common costs exceed its contribution margin
(B) it's contribution margin exceeds its controllable fixed cost and it's common costs.
(C) it cannot produce a contribution margin
(D) it has a net loss
On an income statement prepared with direct costing approach, the excess of sales over the cost
of goods sold, based on variable costs only, is referred to as the:
(A) marginal gross profit on sales
(B) manufacturing margin
(C) marginal income on sales
(D) contribution margin
(A) it's common costs exceed its contribution margin
(B) it's contribution margin exceeds its controllable fixed cost and it's common costs.
(C) it cannot produce a contribution margin
(D) it has a net loss
On an income statement prepared with direct costing approach, the excess of sales over the cost
of goods sold, based on variable costs only, is referred to as the:
(A) marginal gross profit on sales
(B) manufacturing margin
(C) marginal income on sales
(D) contribution margin
2. Solution
1.(B) it's contribution margin exceeds its controllable fixed cost and it's common costs.
2,(C) marginal income on sales