Added on - 25 Sep 2019
Running head- Managerial AccountingMANAGERIALACCOUNTING
1Managerial AccountingManager goes in making segment product line elimination decisions in a way to play safe andsecure and to make a reasonable profit.Decision to stop a product category requires the manager to think how his decision is going toimpact both revenues and expenses, so for this, he focuses on revenues that will change as aresult of his decision and on marginal costs. Then he chooses the outcome that will be moredesiarable and gainfull. (Argouslidis et al ., 2015). And if he needs to find out the effect of hisdecision then he needs to make two contribution margin income statement: the first statementwill assume that continue with the product and second is to drop out if not profitable.If he finds that dropping the product is more fruitful, then he will opt that decision of dropping itand vice versa.So basically the manager decide to eliminate the particular segment of the product afteranalyzing the various situation and its outcome (Hise et al., 1975). End of one segment productline will depend on the following points.If the product item is loss-makingIf the demand for the product is decreasing.Level of profit is less as compared to the market return (Avlonitis et al., 1985).Difficult to survive in the emerging market.Difficulty in cope up with the advanced technology.