alleryStart learning →Dropping a product that looks loss-making after allocation may do what?
ARaise all prices
BLower the cost drivers
CCut every fixed cost
DHurt overall profit
Answer & Solution
Correct answer: D. Hurt overall profit
Allocated fixed costs may persist after the product goes, so the bottom line can worsen.
Keep practising Activity-Based Costing and Management
Browse all Activity-Based Costing and Management questions for CA Final, or explore more Cost and Management Accounting topics.
Related questions
Five defect causes give 50, 30, 10, 6 and 4 cases. How many causes cover 80% of cases?An order-handling pool is Rs 1,50,000 for 500 orders. Product P has 120 orders. Cost chargAn inspection pool is Rs 90,000 for 300 inspections. A 1,500-unit product used 45. Cost peA machining pool costs Rs 2,40,000 over 8,000 machine hours. What is the rate per hour?A setup pool costs Rs 60,000 for 120 setups. Product X needs 30 setups. Setup cost for X?Which benefit is claimed for zero-based budgeting?A drawback of zero-based budgeting is that it demands what?Who created zero-based budgeting at Texas Instruments?