Question
A company is deciding whether or not to eliminate a segment of its business. The segment generates total sales of $104,000, its direct expenses are
A company is deciding whether or not to eliminate a segment of its business. The segment generates total sales of $104,000, its direct expenses are $22,000, and its indirect expenses are $26,000. Its cost of goods sold is $64,000. Six thousand dollars of the direct expenses and $8,000 of its indirect expenses are avoidable expenses. Which of the following is not true?
a. | None of the above | |
b. | This segment has a net loss of $8,000. | |
c. | This segment's avoidable costs are greater than unavoidable costs. | |
d. | This segment is a good candidate for elimination. | |
e. | This segment's revenue is greater than its avoidable costs. |
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