1. Elm Corporation's contribution margin does not cover total fixed expenses. When this happens:

Group of answer choices

Variable expenses equal contribution margin.

Total profit equals total expenses.

Contribution margin is negative.

A loss occurs.

2. Based on what we saw in the lecture example in our module for Hoaglund's Lakeshore, if common fixed expenses are allocated to business segments, this:

Group of answer choices

ensures that all costs are covered.

may cause managers to erroneously keep business segments that should be dropped.

may cause managers to erroneously discontinue business segments.

helps managers make good decisions.