Question: Respond to this statement and question, give one reference... Part of the management activities involves deciding whether to eliminate an unprofitable business segment or a

Respond to this statement and question, give one reference...

Part of the management activities involves deciding whether to eliminate an unprofitable business segment or a product. To make an educated decision, management needs to review the relevant costs and analyze data that change with alternative courses of action. As we have seen in previous chapters, eliminating a product will need an analysis with facts and not intuition based. One important thing to consider is the amount reflected on fixed costs. Eliminating a product might not necessarily increase the net income.

At the end of the day, the analysis of all the alternatives and courses of action is needed. If a product or division elimination also reduces the fixed costs, if it does not, can the equipment be repurposed for something else? Can it be sold? Does the company have another product that will compensate for the discontinued product?

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