Which Is Not a Consideration for Dropping a Product or Product

question 179

Multiple Choice

Which is not a consideration for dropping a product or product line?

• A) Whether the product has a positive or negative contribution margin
• B) If dropping the product or product line will affect sales of remaining products
• C) Not having the need for free capacity
• D) Determining if direct fixed costs could be avoided if the product or product line is dropped

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Definitions:

Budgeting

The process of creating a plan to allocate resources (revenue and expenses) for a specific period, typically used for financial planning and control.

Activity Variances

Differences between the planned or budgeted amounts of costs and revenues and the actual amounts incurred, driven by variations in business activities.

Customers Served

The number of customers a business or service has provided for or sold to during a specific period, indicating the reach or impact of the business.

Revenue Formulas

Mathematical equations or models used to calculate the total income generated from sales of goods or services before any costs or expenses are deducted.