Question

A product line should NOT be discontinued if the contribution margin lost is A. less than the variable costs saved. B. less than the fixed costs saved. C. more than the fixed costs saved. D. more than the variable costs saved.

Answer 1

Answer:

B. less than the fixed costs saved.

Explanation:

Answer 2

A product line should NOT be discontinued if the contribution margin lost is "more than the fixed costs saved."

According to the economic rule, the product line should only be discontinued when the contribution margin lost is less than the fixed cost saved.

Also, this implies that the cost of production should be reduced or the production line discontinued.

However, when the contribution lost is more than the fixed cost saved, that shows profits.

Hence, in this case, it is concluded that the correct answer is option C. "more than the fixed costs saved."

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