Products should be dropped when its total contribution margin does not cover avoidable fixed costs.

Name: Products should be dropped when its total contribution margin does not cover avoidable fixed costs.
Brand: Quizplus
Rating: 4.9 (40 reviews)

Question

Quizplus · Accepted Answer

If a product's total contribution margin does not cover its avoidable fixed costs, it means the product is not generating enough revenue to cover the costs that could be eliminated if the product were discontinued. Therefore, it might be financially beneficial to drop the product.

Products Should Be Dropped When Its Total Contribution Margin Does