(Appendix 6A)If a cost object such as a product or customer has a negative yellow margin, then:
A)its red margin will be positive.
B)its red margin may be either positive or negative.
C)its red margin will be negative.
D)its red margin will be zero.

Question

Quizplus · Accepted Answer

The yellow margin represents the profit margin of a cost object, and a negative yellow margin means that the cost object is operating at a loss. Therefore, the red margin, which represents the contribution margin, will not be able to cover the fixed costs, resulting in a negative red margin.

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