In a decision as to whether or not to drop a product,fixed costs that have been allocated to that product are generally not relevant.

Question

Quizplus · Accepted Answer

Fixed costs that have already been allocated to a product are considered sunk costs, which means they have already been incurred and cannot be recovered. When making a decision about whether to continue producing a product or not, it is more relevant to consider the future costs and revenues associated with that product.

In a Decision as to Whether or Not to Drop