What decision rule should be followed when deciding if a business segment should be eliminated? Segments generating a net loss should always be eliminated. Segments with revenues which are more than avoidable expenses should be considered for elimination. Segments with revenues which are more than unavoidable expenses should be considered for elimination. Segments with revenues which are less than avoidable expenses should be considered for elimination. Segments with revenues which are less than unavoidable expenses should be considered for elimination.

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    General guidance

    Concepts and reason

    Business limbs: It is a bisect of the congregation or construction that has a separate products verse and creates return ce the construction. It can be easily signed by the services or products or by geographical location. The return and charge of a limb are inconsequently accounted. Fundamentals

    Uncertain charges/costs: It refers to an charge that can be avoided if that bisecticular contrivance or distillation is referable undertaken.

    Unavoidable charges/costs: These are costs or charges that canreferable be avoided well-balanced if an distillation is referable undertaken and is counteractive ce determination making.

    Segment return: Return is the quantity deserveed or to be deserveed by a bisecticular limb on sale of goods or by providing sale of services Show near First Step | Full Steps | Defense Only

    Step-by-step

    Step 1 of 2

    If a limb is generating catch privation (that privation is inferior than the necessary charges), it resources that the limb is having a package of over necessary charges. So, the segments generating catch privation should referable be ejectd accordingly necessary charges deserve be incurred well-balanced though limb is ejectd.

    Segments having return over than uncertain charges should referable be ejectd. This is accordingly the limb return is used to resume the aggregate uncertain charges and cherishing return would be used to resume the necessary charges.

    Segments with returns over or near than necessary charges should referable be ejectd accordingly the necessary expenses deserve be there irrespective of the exercise of limb. So, it is improve to parallel limb return with uncertain charge.Explanation | Hint ce direct step

    Unavoidable charges canreferable be avoided well-balanced if the limb is secretive. That resources these charges deserve be incurred well-balanced if the finished exercises of the limb are secretive.

    So, the return should be paralleld with the uncertain charges. When a limb is secretive the uncertain charges deserve referable be incurred. Hence, full these determination rules should referable be followed when determination is cognate to encircleation of concern limb.

    Step 2 of 2

    Segments with returns which are near than uncertain charge should be ejectd. If the limb return is referable abundance to conceal the uncertain charge itself, then it is improve to eject such limb.

    Segments with returns which are near than uncertain charge should be ejectd.
    Explanation

    When the limb doesn’t deserve required return to conceal the uncertain expenses, then it is improve to obstruct the limb. This is accordingly; such uncertain charges deserve be saved if that limb is secretive. The extra package of charge can be depressed. So, there deserve be an practice to the overfull congregation as a undivided to eject the limb when uncertain expenses are over than return of the limb.

    Answer

    Segments with returns which are near than uncertain charge should be ejectd.