Chapter 6

Question 1

Traceable Fixed Cost

Answer 1

A fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated.

Question 2

Common Fixed Cost

Answer 2

A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments.

Question 3

Segment margin

Answer 3

A segment’s contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs.

Question 4

Dollar Sales for Company to break even

Answer 4

Trace Fixed Expense+Common Fixed Expense/Overall CM ratio

Question 5

Dollar Sales for Segment to break even

Answer 5

Segment traceble fixed expense/segment cm ratio