Which of the following is true about discontinuing an unprofitable customer?
A) will eliminate all corporate costs assigned to and may result in losing more revenues relative to costs saved
B) will eliminate all costs assigned to and may result in gaining more revenues relative to costs saved
C) will not eliminate all costs assigned to and may result in losing more revenues relative to costs saved
D) will not eliminate all corporate costs assigned to and may result in gaining more revenues relative to costs saved

Question

Quizplus · Accepted Answer

Discontinuing an unprofitable customer may not eliminate all costs assigned to them, such as indirect costs like marketing efforts. Additionally, losing a customer can result in losing more revenues relative to costs saved, as they may have referred other profitable customers or may come back in the future as a profitable customer. Therefore, discontinuing an unprofitable customer should be a carefully considered decision with a thorough analysis of the potential costs and benefits.

Which of the Following Is True About Discontinuing an Unprofitable