Question

Which of the following statements about the segment margin is not true?

a) It represents the profit of a specific business segment.
b) It includes both variable and fixed costs.
c) It is useful for evaluating segment performance.
d) It only considers variable costs.

Answer 1

The segment margin represents the profit of a specific business segment and includes both variable and fixed costs. It is useful for evaluating segment performance because it provides insights into the profitability and cost structure of individual business units within a company.

Step-by-step explanation:

The correct answer is d) It only considers variable costs. The segment margin represents the profit of a specific business segment and includes both variable and fixed costs. It is useful for evaluating segment performance because it provides insights into the profitability and cost structure of individual business units within a company. However, the segment margin does not only consider variable costs. It takes into account both variable and fixed costs to provide a comprehensive view of the segment's financial performance.