Segment margin is a better measure of the long-run profitability of a segment than contribution margin.

Name: Segment margin is a better measure of the long-run profitability of a segment than contribution margin.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Segment margin takes into account all direct and indirect costs related to a particular segment, including fixed costs, while contribution margin only considers direct costs. Therefore, segment margin provides a more accurate picture of the profitability of a segment in the long run.

Segment Margin Is a Better Measure of the Long-Run Profitability