In the decision-making process, which of the following situations would be best addressed by managers using a segmented income statement rather than a contribution margin format income statement?
A) The decision on whether or not a one-time special order for a customer should be accepted.
B) The calculation of the break-even point for the upcoming month.
C) The decision on whether or not an entire product line should be discontinued.
D) The decision on whether or not to process a product further or sell "as is."

Question

Quizplus · Accepted Answer

A segmented income statement breaks down the revenues and expenses of different product lines or business segments. Therefore, it would be more appropriate to use a segmented income statement for deciding whether to discontinue an entire product line, as it will provide a detailed analysis of the profitability of each product line. A contribution margin format income statement, on the other hand, would be more suitable for decisions pertaining to the pricing of products, special orders, break-even analysis, or processing decisions.

In the Decision-Making Process, Which of the Following Situations Would