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Would dropping the product line really improve profit?
Separate allocated overhead from truly avoidable cost and capacity redeployment value.
Example scenario
Editable demonstration inputs, not verified industry benchmarks. Enable JavaScript to calculate your own scenario.
- Annual product-line revenue
- $1,000,000
- Annual variable delivery costs
- $700,000
- Allocated fixed overhead on report
- $400,000
- Fixed cost actually avoidable after exit
- $100,000
- Annual contribution from capacity redeployment
- $250,000
- One-time exit cash cost
- $75,000
First-year benefit of exiting product line
Example result only, not a forecast or promise.
- Current contribution before fixed allocation
- $300,000
- Reported profit after allocated overhead
- -$100,000
- Allocated overhead not avoidable
- $300,000
What to do with this result
Validate interdependencies and customer spillover; a reported loss after allocation does not prove the product should be closed.
Know what is inside the model.
Planning model, not personalized financial advice. Your inputs remain in your browser.
Calculation method
First-year exit benefit = avoidable fixed cost + redeployed contribution − current product contribution − exit cash cost. Allocated overhead is shown for reconciliation, not assumed saved.
Assumptions and limitations
- Example inputs are editable scenarios, not Aryo results or independently verified industry benchmarks.
- Business revenue is not owner income. These scenarios do not predict demand, guarantee earnings or establish a business valuation.