Which of the following measurements provides a better basis for eliminating a department?

Question

Quizplus · Accepted Answer

If fixed expenses exceed contribution margin, it means the department is not covering its expenses and is losing money. Therefore, eliminating this department would lead to cost savings for the company. The other options provide some level of profitability or at least break-even, so eliminating a department based on those measurements may not necessarily provide cost savings.

Which of the Following Measurements Provides a Better Basis for Eliminating