A Company Is Considering Eliminating a Product Line

question 115

Multiple Choice

A company is considering eliminating a product line. The fixed costs currently allocated to the product line will be allocated to other product lines upon discontinuance. If the product line is discontinued

• A) total net income will increase by the amount of the product line's fixed costs.
• B) total net income will decrease by the amount of the product line's fixed costs.
• C) the contribution margin of the product line will indicate the net income increase or decrease.
• D) the company's total fixed costs will decrease.

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Definitions:

Stakeholders

Individuals, groups, or organizations that have an interest or stake in the outcomes of a company's actions, decisions, and policies, including employees, customers, investors, and communities.

Conscious Marketing

An approach to marketing that focuses on making positive decisions that consider the welfare of customers, employees, community, and the environment.

Marketplace

A space, physical or digital, where buyers and sellers come together to transact goods and services.

Corporate Social Responsibility

A corporate strategy that includes social and environmental considerations into the business's day-to-day operations and their engagement with stakeholders.