Profitability by products


Rex Santos, a cost accountant, prepares a product profitability report for Jane Gates, the production manager. Much to Rex's surprise, almost one-third of the company's products are not profitable. He says, "Jane, it looks like we will have to drop one-third of our products to improve overall company profits. It's a good thing we decided to look at profitability by products." Do you think Jane will agree with this approach? Why?

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Accounting Basics: Profitability by products
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