Allocating common fixed expenses to business segments:
A) may cause managers to erroneously discontinue business segments.
B) may cause managers to erroneously keep business segments that should be dropped.
C) ensures that all costs are covered.
D) helps managers make good decisions.

Question

Quizplus · Accepted Answer

Allocating common fixed expenses to business segments can make a segment appear less profitable than it actually is, potentially leading managers to discontinue segments that are actually beneficial to the company.

Allocating Common Fixed Expenses to Business Segments