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) The losses are minimal.
B) The variable costs are less than revenues.
C) The variable costs are more than revenues.
D) The allocated fixed costs are more than revenues.

Question

Quizplus · Accepted Answer

If the variable costs are less than revenues, the operation is contributing positively to covering fixed costs and potentially generating profit, making it a valid reason not to discontinue it.

Discontinuing a Product or Segment Is a Huge Decision That