Discontinuing a product or segment is a huge decision that must be carefully analyzed.Which of the following would be a valid reason not to discontinue an operation?
A) losses are minimal
B) variable costs are less than revenues
C) variable costs are more than revenues
D) allocated fixed costs are more than revenues

Question

Quizplus · Accepted Answer

When variable costs are less than revenues, it means the operation is covering its variable costs and contributing towards fixed costs and potentially generating profit. This is a valid reason not to discontinue an operation.

Discontinuing a Product or Segment Is a Huge Decision That