A Decision to Make or Eliminate an Unprofitable Product Is

question 8

Multiple Choice

A decision to make or eliminate an unprofitable product is a

• A) special-order decision.
• B) make-or-buy decision.
• C) keep-or-drop a product-line decision.
• D) both b and c.

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Definitions:

Initial Cost

Initial cost refers to the amount of money spent to acquire, or the cost associated with starting, an investment, project, or venture, including all necessary expenses to prepare the asset for its intended use.

Payback

The period of time required to recoup the funds expended in an investment, or how long it takes for an investment to reach a breakeven point.

Annual Cash Flows

The total cash that is generated and used by a business in one fiscal year.

Required Rate

This is often referred to as the minimum acceptable return on an investment, set by investors or managers.