Manufacturing margin less variable selling and administrative expenses equal marginal income.

Question

Quizplus · Accepted Answer

This statement is true. Marginal income is the amount of revenue that remains after deducting variable costs from the total revenue. In this case, the manufacturing margin is the gross profit from manufacturing operations, which does not vary with changes in sales volume. Therefore, if the selling and administrative expenses are also variable (meaning they change with sales volume) and equal in amount to the manufacturing margin, then the marginal income would be zero.

Manufacturing Margin Less Variable Selling and Administrative Expenses Equal Marginal