When deciding whether to discontinue a segment of a business, managers should focus on:
A)equipment used by that segment that could become idle
B)reallocation of corporate costs
C)how total costs differ among alternatives
D)operating income per unit of the discontinued segment

Question

Quizplus · Accepted Answer

Managers should focus on how total costs differ among alternatives when deciding whether to discontinue a segment of a business. This will help them determine the profitability of the segment and whether it is financially feasible to continue operating it. Factors such as equipment used by that segment and reallocation of corporate costs should also be considered, but they are not the main focus when making the decision. Operating income per unit of the discontinued segment may be relevant, but it alone does not provide a complete picture of the financial impact of discontinuing the segment. Therefore, C is the best choice.

When Deciding Whether to Discontinue a Segment of a Business