Which of the following statements is true regarding a company's segment margin?
A) It is primarily used to make short-term decisions such as cost-volume-profit (CVP) analysis and special order decisions.
B) It ignores all fixed costs.
C) It is primarily a measure of long-term profitability.
D) It should not be used to make decisions on whether or not to drop a product line.

Question

Quizplus · Accepted Answer

Segment margin is a measure of the profitability of a particular segment of a business, considering both variable and fixed costs directly attributable to that segment. It provides insight into the long-term profitability of different parts of a business, helping in strategic decision-making such as expansions, contractions, or adjustments in strategy.

Which of the Following Statements Is True Regarding a Company's