Adventures Company provides event management services. The company has three employees, each assigned to specific customers. The company considers each employee's territory as a business segment. The following data relate to its three segments for the month of June: $$\begin{array} { | l | r | r | r | }
\hline & \text { Francisco } & \text { Liu } & \text { Jordan } \
\hline \text { Sale Revenue } & \$ 8000 & \$ 12,800 & \$ 13,350 \
\hline \text { Variable costs } & \$ 5700 & \$ 5200 & \$ 10,500 \
\hline
\end{array}$$ The business segments had the following number of customers: Francisco, 24 ; Liu, 28; and Jordan, 33. The total fixed costs for the month of June amount to $3400. Which business segment was the most profitable?
A) Francisco
B) Liu
C) Jordan
D) Both Francisco and Liu are equally profitable

Question

Adventures Company provides event management services. The company has three employees, each assigned to specific customers. The company considers each employee's territory as a business segment. The following data relate to its three segments for the month of June: $$\begin{array} { | l | r | r | r | } 
\hline & \text { Francisco } & \text { Liu } & \text { Jordan } \
\hline \text { Sale Revenue } & \$ 8000 & \$ 12,800 & \$ 13,350 \
\hline \text { Variable costs } & \$ 5700 & \$ 5200 & \$ 10,500 \
\hline
\end{array}$$ The business segments had the following number of customers: Francisco, 24 ; Liu, 28; and Jordan, 33. The total fixed costs for the month of June amount to $3400. Which business segment was the most profitable?
A) Francisco
B) Liu
C) Jordan
D) Both Francisco and Liu are equally profitable

Quizplus · Accepted Answer

To determine the most profitable segment, we calculate the profit for each segment by subtracting the variable costs from the sales revenue and then allocating the fixed costs. However, the fixed costs allocation method isn't specified, so we'll consider the fixed costs as a whole for the company. The profit for each segment before fixed costs is:- Francisco: $8000 - $5700 = $2300- Liu: $12800 - $5200 = $7600- Jordan: $13350 - $10500 = $2850After subtracting the total fixed costs ($3400) from the company's overall profit, it's clear that Liu's segment, with the highest profit before fixed costs, remains the most profitable even when fixed costs are considered at the company level.

Adventures Company Provides Event Management Services The Business Segments Had the Following Number of Customers: Francisco