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.
Segment margin
A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs.
Absorption costing
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.
Traceable fixed cost
Any part or activity of an organization about which managers seek cost, revenue, or profit data.
Segment
A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.
Variable costing
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.
Common fixed cost