When a Department or Product Line Is Dropped, the Common

question 114

Multiple Choice

When a department or product line is dropped, the common fixed costs which had been allocated to that department:

• A) are eliminated.
• B) become variable costs.
• C) are allocated to the remaining departments or product lines.
• D) become sunk costs.

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Definitions:

Customer

A customer is an individual or entity that purchases goods or services from another individual or entity, often for personal use.

Unmet Needs

Desires or requirements of consumers that have not been addressed or satisfied by existing products or services in the market.

Business Models

The strategic plan for how a company will generate revenue, make a profit, and sustain its operations, outlining sources of income, target customer base, products, and details of financing.

Business Model

A conceptual structure that supports the viability of a business and explains how it operates, makes money, and delivers value to stakeholders.