113 from a purely financial standpoint if a product line has a negative contribution 4310354

113) From a purely financial standpoint, if a product line has a negative contribution margin, the product line should be discontinued.

114) Fixed costs that exist even after a product is discontinued are called unavoidable fixed costs.

115) When deciding whether to discontinue a product, managers should only consider the costs that will be saved.

116) If a product has a negative contribution margin, it should not be discontinued.

117) Fixed costs that will continue to exist if a product is discontinued are relevant.

118) Unavoidable fixed costs are

A) irrelevant to the decision of whether to discontinue a product line because they will differ between alternatives.

B) relevant to the decision of whether to discontinue the department.

C) irrelevant to the decision of whether to discontinue a product line because they will not differ between alternatives.

D) none of the above.

119) Common fixed costs that are allocated between departments are generally

A) direct fixed costs of the department.

B) relevant to the decision of whether to discontinue the department.

C) irrelevant to the decision of whether to discontinue the department.

D) direct fixed costs of other departments.

120) Fixed costs that are allocated among all departments are known as

A) direct fixed costs.

B) relevant fixed costs.

C) general fixed costs.

D) common fixed costs.

121) A company's manager would consider which of the following in deciding whether to discontinue its electronics product line?

A) The costs it could save by discontinuing the product line

B) The revenues it would lose from discontinuing the product line

C) How discontinuing the electronics product line would affect sales of its other products (like CDs)

D) All of the above

122) All of the following are considerations for discontinuing a product or product line, except

A) whether the product has a positive or negative contribution margin.

B) not having any free capacity.

C) if discontinuing the product or product line will affect sales of remaining products.

D

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Regards,

Cathy, CS.