When will the elimination of a product line have no effect on the company's overall profit?
A) When the avoidable fixed costs equal the product line's contribution margin
B) When the unavoidable fixed costs equal the product line's contribution margin
C) When there are no fixed costs incurred by the product line
D) When the product line contribution margin is negative

Question

Quizplus · Accepted Answer

When the avoidable fixed costs equal the product line's contribution margin, the elimination of the product line will have no effect on the company's overall profit because the savings from the fixed costs will offset the loss of the contribution margin.

When Will the Elimination of a Product Line Have No