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13 lo 6 if an unprofitable segment is eliminated a

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13. (LO 6) If an unprofitable segment is eliminated:a)net income will always increase.b)variable costs of the eliminated segment will have to be absorbed by other segments.c)fixed costs allocated to the eliminated segment will have to be absorbed by other segments.d)net income will always decrease.c. Even though the segment is eliminated, the fixed costs allocated to that segment will still have to becovered. This is done by having other segments absorb the fixed costs of that segment. Choices (a) and(d) are incorrect because net income can either increase or decrease if a segment is eliminated. Choice(b) is incorrect because when a segment is eliminated, the variable costs of that segment will also beeliminated and will not need to be absorbed by other segments.
14. (LO 6) A segment of Hazard Inc. has the following data.If this segment is eliminated, what will be the effect on the remaining company? Assume that 50% ofthe fixed expenses will be eliminated and the rest will be allocated to the segments of the remainingcompany.
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