If a product or other segment of a business is generating a loss, it is erroneous...
If a product or other segment of a business is generating a loss, it is erroneous to assume that the total company income will increase by eliminating the product line or other segment of the business generating the loss.
a.This statement is true.
b.This statement is true only for manufacturing companies.
c.This statement is true only for service companies.
d.This statement is false.
Homework Answers
Ans:
d.This statement is false. is Correct Answer
Explanation:
The common fixed costs allocated to that product line even if particular segment or unit of product is in loss ,,,If particular segment is closed then the burden bare of such loss segment is to be borne by other segment units which results decrease in overall income And direct fixed costs are avoidable if a segment is eliminated which is avoidable in nature belongs to such unit
Example: advertising for a specific product line is a direct fixed cost
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If a product or other segment of a business is generating a
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