From a purely financial standpoint, if a product line has a negative contribution margin, the product line should be discontinued.

Question

Quizplus · Accepted Answer

A negative contribution margin means that the product line is not generating enough revenue to cover its variable costs. If the product line is discontinued, the company will no longer incur those variable costs and can focus on producing and selling products with positive contribution margins, ultimately increasing profitability.

From a Purely Financial Standpoint, If a Product Line Has