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

Question

Quizplus · Accepted Answer

A negative contribution margin means that the product is not covering its variable costs, which would eventually lead to losses for the company. Therefore, dropping the product line would be a wise decision, assuming there are no other significant considerations that would outweigh the negative contribution margin.

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