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QUESTION 3 “Managers should drop any product line that reports an operating loss.” Indicate whether you...

QUESTION 3
“Managers should drop any product line that reports an operating loss.”
Indicate whether you agree or disagree with this statement. Explain and justify your answer.

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I am disagree with this statement "Managers should drop any product line that reports an operating loss" becuase before dropping any product line we must ensure that loss of contribution margin should exceed saving in fixed costs. In case if we drop any product line that reports an operating loss, but after dropping we are not able to eliminate all fixed costs then it may result in higher net operating loss after dropping that particular product line.

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