1. The problem asks about the relevance of opportunity cost and the criteria for dropping a segment. 2. Opportunity cost is the value of the next best alternative foregone when making a decision. It is relevant when resources are scarce or constrained because choosing one option means giving up another. 3. For Question 13, the correct condition is when capacity is constrained. This is because opportunity cost matters when you cannot use all your capacity freely and must choose the best use. 4. For Question 14, a segment should be dropped if its avoidable costs exceed its contribution margin lost. This means the segment is costing more to keep than the profit it contributes. 5. Sunk costs and old assets are not relevant for this decision because sunk costs cannot be recovered and old assets do not directly affect the incremental costs and benefits. Final answers: - Question 13: Capacity is constrained - Question 14: Its avoidable costs exceed its contribution margin lost