If a cost object such as a product or customer has a negative green margin, then:
A)its yellow margin will be positive.
B)its yellow margin may be either positive or negative.
C)its yellow margin will be negative.
D)its yellow margin will be zero.

Question

Quizplus · Accepted Answer

The yellow margin represents the contribution margin, which is the revenue minus the variable costs. If the green margin (revenue minus all costs) is negative, then it means the cost of producing the product or serving the customer is higher than the revenue generated. Therefore, the contribution margin will also be negative, resulting in a negative yellow margin.

If a Cost Object Such as a Product or Customer