A product line should be dropped when
A)it has a positive contribution margin.
B)it has unavoidable fixed costs.
C)there will be a positive change in income if the product line is dropped.
D)All of these answer choices are correct.

Question

Quizplus · Accepted Answer

A product line should be dropped when there will be a positive change in income if the product line is dropped. Even if the product has a positive contribution margin, if the fixed costs cannot be avoided, it may still be better to drop the product line if it is not generating enough profit to justify the fixed costs. Therefore, the only correct choice is C.

A Product Line Should Be Dropped When