If a product line has a negative contribution margin, the product line should probably be dropped, assuming no other significant considerations.

Question

Quizplus · Accepted Answer

This is because a negative contribution margin means that the product line is actually costing more to produce than it is bringing in revenue, which ultimately results in a net loss for the company. It is not sustainable in the long run and dropping the product line would allow the company to allocate resources towards more profitable products lines.

If a Product Line Has a Negative Contribution Margin, the Product