“If a product line is generating a loss, then it should be discontinued.” Do you agree? Explain.

Yes, I agree with this decision, for the follows reasons.     

If its a loss leader, no. A loss leader is to get customers in the store to buy it. When they are in the store, they will likely go and buy other stuff that have mark ups to make up for the loss on that item. Coke and pepsi are an example usually. Otherwise, its good to get rid of.

A product line should be discontinued only if the contribution margin that will be lost as a result of dropping the line is less than the fixed costs that would be avoided. Even in that situation the product line may be retained if it promotes the sale of other products.

So, If a product line is generating a loss, then it should be discontinued.