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

Question

Quizplus · Accepted Answer

The green margin is the revenue generated by a cost object minus the variable costs associated with that cost object. If the green margin is positive, it means that the revenue generated is greater than the variable costs. However, it doesn't tell us anything about the fixed costs associated with that cost object. The red margin is the green margin minus the fixed costs. Therefore, it is possible that the red margin may be positive, negative or zero, depending on the amount of fixed costs associated with the cost object.

If a Cost Object Such as a Product or Customer