Generally,a Product Line Should Be Dropped When the Fixed Costs

question 61

True/False

Generally,a product line should be dropped when the fixed costs that can be avoided by dropping the product line are less than the contribution margin that will be lost.

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Definitions:

Treasury Stock

Shares of a company's own stock that it has reacquired from shareholders but not retired, and are available for reissuance.

Stockholders' Equity

The owners' residual interest in a corporation, calculated as the difference between assets and liabilities.

Stockholders' Equity

The amount of capital given to a company by its shareholders, plus retained earnings or minus the company's accumulated losses.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and equity at a specific point in time.