In deciding whether to drop a product line, the first question management should ask is:

Question 23 options:

	What are the revenues from the product line?
	What are the fixed costs associated with the product line?
	Does dropping the product line affect the sales of its other products?
	Does the product provide a positive contribution margin?

Question 24 (2 points)

Capital budgeting focuses on:

Question 24 options:

	accrual accounting
	net cash flows
	cash outflows only
	cash inflows only

Question 25 (2 points)

In deciding whether to drop its diaper bag product line, a company's manager should ignore ________.

Question 25 options:

	the effect of dropping the product line on the sales of its other products
	the amount of unavoidable fixed costs
	the variable and fixed costs it could save by dropping the product line
	the revenues it would lose from dropping the product line

Question 26 (2 points)

Which capital budgeting method uses accrual accounting, rather than net cash inflows, as a basis for calculations?

Question 26 options:

	internal rate of return
	accounting rate of return
	payback
	net present value