A segment of a business probably should be discontinued


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

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Financial Accounting: A segment of a business probably should be discontinued
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