The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed: Group of answer choices manufacturing margin contribution margin differential cost differential revenue

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Business

Yahir Roach

6 March, 04:08

The amount of increase or decrease in revenue that is expected from a particular course of action as compared with an alternative is termed: Group of answer choices manufacturing margin contribution margin differential cost differential revenue

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D) differential revenue

Explanation:

Manufacturing Margin - is the concept of economy which is calculated by subtracting the cost of goods sold from total sales or revenue that resulting by dividing the total sales or revenue to reach at the gross margin. The higher gross margin pronounces the better process that the company making more profit on each dollar of sales. There are used fixed and variable costs to determine this margin. Fixed cost means more stable and happens slowly but the variable cost varies very quickly in order to the changing capacity of the production daily, monthly or weekly.

Contribution Margin - compared to manufacturing margin, it refers to the basis of gross or per unit, in wide meaning, it shows that the money generated incrementally and this was for the each unit of product which was sold after variable portion of the firm's costs was deducted.

It is measured as: selling price per unit - variable cost per unit

Differential Cost - when there are two alternative decisions or various output levels, the cost difference between these decisions or output levels state the differential cost. This cost may be variable cost, fixed cost or just the mixed of these together. Depending on this type cost, the differential revenue will be able to be determined.

Differential Revenue - as we see above there were two alternatives or two or more output levels and it was needed to find the differences between the costs, exactly the same would happen for the revenues respectively. There will be decision making about the costs and it will result in the revenue. Differential Revenue means that there is a particular action of course which is rather than the alternative one and it was expected like the increase or decrease in revenue based on this particular course of action. That's why the response will be differential revenue.