Which of the following statements is true? (You may select more than one answer.)

a. Common fixed costs should be allocated to business segments when making decisions because all of a company’s costs need to be covered to be profitable.

b. When making decisions, common fixed costs should be allocated to business segments based on each segment’s sales revenue because this reflects each segment’s

“ability to bear” additional costs.

c. Common fixed costs should not be allocated to business segments for decisionmaking purposes.

d. When making decisions, allocating common fixed costs to segments may understate the true profitability of those segments.