In Deciding Whether to Add or Delete a Product,the Insurance

question 109

Multiple Choice

In deciding whether to add or delete a product,the insurance expense associated with the custom-built equipment used to produce the product is an ________ cost.Assume the equipment will be sold if the company discontinues the product.

• A) avoidable fixed
• B) avoidable variable
• C) unavoidable fixed
• D) unavoidable variable

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Definitions:

Complementary Goods

Products or services that are often used together, where the increase in demand for one leads to an increase in demand for the other.

Market Demand

The total quantity of a good or service that all consumers are willing to purchase at a given price over a specified period.

Complementary Goods

Products or services that are typically used together, where the use of one enhances the use or value of the other.

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.