For purposes of determining the costs to be included in each segment's performance evaluations, in general common fixed costs should be allocated to each segment and traceable fixed costs should not be assigned to segments.

Traceable Fixed Costs

Fixed expenses that can be directly linked to a specific business segment or product.

Common Fixed Costs

Costs that are shared among multiple product lines or departments within an organization and do not change with the volume of production.

Segment Performance

An analysis of a specific part of a company, such as a division or product line, to evaluate its contribution to the overall performance of the business.