Chapter 9 16. In a decision to eliminate a segment, remaining segments must have

Question

Chapter 9

16. In a decision to eliminate a segment, remaining segments must have sufficient contribution margin to cover their own direct costs and the common costs.

a. True

b. False

17. The sales mix analysis, which uses incremental analysis to identify the relevant costs and revenues, consists of two steps.

  a. True

b. False

18. Contribution margin per unit is calculated as selling price per unit less fixed costs per unit.

a. True

b. False

19. There are products or services that can be either sold in a basic form or be processed further.

a. True

b. False

20. A sell-or-process-further decision is a decision about whether to sell a joint product at the split-off point or sell it after further processing.

a. True

b. False

Explanation / Answer

1 TRUE 2 FALSE 3 FALSE Contribution Margin = Sales- Variable Costs 4 TRUE 5 TRUE

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