Which of the Following Is Irrelevant in the Decision for a Manufacturing

question 230

Multiple Choice

Which of the following is irrelevant in the decision for a manufacturing company's manager to drop the electronics product line?

• A) The costs it could save by dropping the product line
• B) The revenues it would lose from dropping the product line
• C) How dropping the electronics product line would affect sales of its other products (like CDs)
• D) The cost of the manufacturing equipment specific to that product line

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Definitions:

Unit Sales

The total quantity of an item or product sold.

Contribution Margin Ratio

A ratio that measures the proportion of each sales dollar remaining after variable costs have been deducted.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit of a product, indicating how much each unit sold contributes to covering fixed costs and generating profit.

Break-even

The situation in which complete costs equate to total revenues, achieving a break-even point with no gains or losses.