Why did it cut the bid on a keyword that's making sales?

Converting and profitable are different things. A keyword at 45% ACOS against a 25% target is producing sales that cost nearly double what you decided they should.

The cut is calculated, not arbitrary: it moves toward the CPC that would put that keyword at your target, based on what it actually earns per click. It is also limited by your Clamp, so it steps rather than jumps.

You will usually lose some volume. That is the trade you set when you chose the target. If the keyword is strategically important regardless of efficiency, put it in a Hands-off campaign campaign or reject the proposal.