When should a segment be dropped


Response to the following questions:

1. If total manufacturing costs, including fixed manufacturing overhead, are larger than the price offered by a purchaser for a special order, the order should not be accepted because the profits of the company will be adversely affected. Do you agree? Explain. (Ignore qualitative factors.)

2. In deciding whether to exit or enter a market, what factors should be considered?

3. When should a segment (product, product line, division, etc.) be dropped? When should a segment be added?

 

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Cost Accounting: When should a segment be dropped
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