If a company decides to eliminate a product, fixed costs allocated to that product line will be avoided.

Name: If a company decides to eliminate a product, fixed costs allocated to that product line will be avoided.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Fixed costs are incurred regardless of the level of production or sales, so eliminating a product line does not avoid these costs. They are typically only avoided if the company shuts down operations entirely or sells off the part of the business associated with those fixed costs.

If a Company Decides to Eliminate a Product, Fixed Costs