If a Department Has a Positive Direct Operating Margin, It

question 17

True/False

If a department has a positive direct operating margin, it normally should be discontinued.

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Definitions:

High Margin

Refers to products or services that yield a significantly greater profit relative to their cost.

Market Skimming

A pricing strategy involving setting high prices initially to target customers willing to pay more before lowering prices to attract a broader market.

Razorblade Strategy

A business model where the initial product is sold at a low price, and profit is generated from selling complementary goods.

Market Share

A measure of the percentage of sales within a market that is held by one product or company.