Fixed costs are irrelevant in decisions about whether a product should be dropped.

Question

Quizplus · Accepted Answer

Fixed costs are relevant in decisions about whether a product should be dropped. Even if a product is not generating enough revenue to cover its variable costs, if dropping the product would result in losing more money due to the fixed costs already incurred, it may not be the best decision. Therefore, fixed costs should be considered in such decisions.

Fixed Costs Are Irrelevant in Decisions About Whether a Product