(Appendix 6A)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

A negative green margin indicates that the direct costs associated with the cost object exceed its revenue, meaning that the cost object is not generating enough revenue to cover its direct costs. The yellow margin represents the indirect costs associated with the cost object, and if the direct costs are already greater than the revenue, it is highly likely that the indirect costs will not be enough to cover the shortfall. Therefore, the yellow margin will also be negative.

(Appendix 6A)If a Cost Object Such as a Product or Customer