REFERENCE: Ref.08_02
The Fratilo Co.had three operating segments with the following information:
In addition,revenues generated at corporate headquarters are $1,400.
-The Rivers Co.had four separate operating segments:
What amount of revenues must be generated from one customer before that party must be identified as a major customer?

Question

REFERENCE: Ref.08_02
The Fratilo Co.had three operating segments with the following information:
  In addition,revenues generated at corporate headquarters are $1,400.
-The Rivers Co.had four separate operating segments: 
What amount of revenues must be generated from one customer before that party must be identified as a major customer?

Quizplus · Accepted Answer

To determine a major customer, we need to identify if any customer accounts for more than 10% of the company's revenue.

For Fratilo Co., the total revenue is $11,200 ($4,000 + $3,200 + $4,000), and since the revenues generated at corporate headquarters are only $1,400, we can ignore that. Therefore, a customer would need to generate more than $1,120 ($11,200 x 10%) to be considered a major customer.

For Rivers Co., the total revenue is $95,200 ($20,800 + $17,600 + $30,400 + $26,400), and again we can ignore the revenue generated at corporate headquarters. Thus, a customer would need to generate more than $9,520 ($95,200 x 10%) to be considered a major customer.

The options given in the question are all calculated using Fratilo Co.'s revenue, which means that the correct answer must be greater than $1,120. Option C is the only one that meets that criteria, with a value of $5,264 (which is 40% of Fratilo Co.'s total revenue). Therefore, the answer is C.

REFERENCE: Ref.08_02 The Fratilo Co.had Three Operating Segments with the Following Information