If a product line was eliminated,forecasted annual corporate profits in the short run would decrease by the amount of that product line's contribution margin.

Question

Quizplus · Accepted Answer

The contribution margin represents the amount of revenue remaining after deducting variable expenses, and it contributes to covering fixed costs and generating profits. Therefore, if a product line is eliminated, the contribution margin that it generates would no longer be available to cover fixed costs and increase profits, resulting in a decrease in the company's forecasted annual profits in the short run.

If a Product Line Was Eliminated,forecasted Annual Corporate Profits in the Short