Dropping an Unprofitable Product Immediately Is the Best Strategy When

question 46

Multiple Choice

Dropping an unprofitable product immediately is the best strategy when

• A) all advertising and promotional efforts have been exhausted.
• B) customers have a negative outlook on other products.
• C) losses are too great to prolong the product's life.
• D) the product's performance cannot be improved.
• E) there is low compatibility with the firm's business strategies.

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Definitions:

Depreciable Cost

The cost of a fixed asset minus its salvage value, representing the total amount that can be depreciated over its useful life.

Constant Percentage

A fixed rate applied uniformly across a set of variables or values, often used in finance and mathematics.

Salvage Value

The estimated resale value of an asset at the end of its useful life, often considered for depreciation calculations.

Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life to reflect its decrease in value due to wear and tear, age, or obsolescence.