Asked by Riley Jackson on Jun 13, 2024
Verified
A product whose revenues do not cover its variable costs and its traceable fixed costs should usually be dropped.
Traceable Fixed Costs
Fixed costs that can be directly linked to a specific product, service, or segment of a business.
- Understand the significance of fixed and variable costs in making product discontinuation choices.
Verified Answer
JH
Jassim Hamdan
Jun 14, 2024
Final Answer :
True
Explanation :
A product that does not cover its variable costs and traceable fixed costs is operating at a loss and is not profitable. Therefore, it is usually wise to drop the product to prevent further losses.
Learning Objectives
- Understand the significance of fixed and variable costs in making product discontinuation choices.
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