Which of the following statements is true?
A)If the segment margin is negative, the segment should be retained.
B)If the segment margin is negative, it should remain in operation until a better use can be found for its resources.
C)If the segment margin is negative, it should be combined with another segment.
D)If the segment margin is negative, the operation should be dropped.

Question

Quizplus · Accepted Answer

If the segment margin is negative, it means that the operating costs are exceeding the revenue generated by the segment. Continuing to operate the segment would result in further losses for the company. Therefore, the operation should be dropped in order to avoid further financial problems.

Which of the Following Statements Is True