Marginal revenue is the additional income that accrues to an organization as the result of selling an extra unit of sales. It is a critical metric for businesses in understanding the profitability impact of their incremental sales decisions.
The shutdown point represents the output price level at which a firm's revenues exactly cover fixed costs. Below this price level, a firm's losses would be minimized by ceasing operations as continued production would generate greater losses.
Transfer prices refer to the costs at which goods and services are exchanged between divisions or subsidiaries within a conglomerate. They significantly influence the profitability of each division and can serve multiple strategic purposes including motivating managers, evaluating performance, maintaining autonomy, and moving profits.
