A product line should NOT be discontinued if the contribution margin lost is
A)more than the fixed costs saved.
B)less than the fixed costs saved.
C)more than the variable costs saved.
D)less than the variable costs saved.

Question

Quizplus · Accepted Answer

Discontinuing a product line should only be undertaken if the contribution margin lost is less than or equal to the fixed costs saved by discontinuing it. If the contribution margin lost is greater than the fixed costs saved, discontinuing the product line would actually decrease the company’s profitability. Therefore, option A is correct.

A Product Line Should NOT Be Discontinued If the Contribution