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10. What decision rule should be followed when deciding if a business segment should be eliminated? Segments generating a net loss should always be eliminated. a) b) with revenues that are more than avoidable expenses should be considered for Segments elimination. c) Segments with revenues that are more than unavoidable expenses should be d) with revenues that are less than avoidable expenses should be considered for elimination. Segments should be considered for Segments with revenues that are less than unavoidable expenses elimination. e) 11. A company expects its three departments to yield the following income for next year: Dept. Q Dept. R Dept.S 56,000 $7,000 $8,000 Sales Expenses Avoidable Unavoidable Total expenses 2,000 3,000 4,000 1,500 2,500 4,500 3,500 5,500 8,500 Net income (loss) $2,500 $1,500 ($500) Compute the change to the company's total net income if Dept. S is eliminated a) $500 increase b) $500 decrease c) $4,000 increase d $4,000 decrease e) $3,500 decrease 12. Flower Enterprises Inc. expects its three departments to yield the following income for next year: Dept. F Dept.G Dept. H $9,000 $10,000 $8,000 Sales Expenses Avoidable 3,000 2,000 5,000 4,000 6,000 1,000 7,000 8,000 6,000 Net income (loss) $2,000 $2,000 $2,000 Total expenses Which of the following statements is true regarding Flower's business segments? a) If Dept. Fis eliminated, overall profit will decline $5,000. b) Overall profit will decline by $2,000 if any one of these segments is eliminated. c) d) e) If Dept. G is eliminated, overall profit will decline $8,000. if Dept. H is eliminated, overall profit will increase $3,000. Eliminating Dept. H will reduce overall profit more than eliminating Dept. F

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