A Decision to Discontinue a Given Product on the Basis

question 81

True/False

A decision to discontinue a given product on the basis of contribution margin data should include consideration of the probable impact of the discontinuance on the sales of other products.

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Definitions:

Factory Depreciation

The systematic reduction in the recorded cost of fixed assets (such as manufacturing equipment) to account for wear and tear or obsolescence over time.

Total Manufacturing Costs

The aggregate cost of direct material, direct labor, and manufacturing overhead incurred in producing goods.

Operating Expenses

Operating expenses consist of the costs related to a company's primary operational activities, excluding costs associated with manufacturing or production.

Factory Utilities

Expenses related to services like electricity, water, and gas utilized in the manufacturing process.