What decision rule should be followed when deciding if a business segment should be eliminated?

Question

Quizplus · Accepted Answer

A business segment should be considered for elimination if its revenues are less than avoidable expenses, meaning the segment is not generating enough income to cover its expenses that can be avoided by eliminating the segment. If a segment's revenues are less than unavoidable expenses, it would be impossible to eliminate the segment without potentially harming the overall business. Additionally, simply looking at net loss does not provide enough information as a segment could have high revenues but still incur a net loss due to high unavoidable expenses.

What Decision Rule Should Be Followed When Deciding If a Business