To Determine Whether a Substantial Portion of a Firm's Operations

question 22

Multiple Choice

To determine whether a substantial portion of a firm's operations are explained by its segment information, the combined revenue from sales to unaffiliated customers of all reportable segments must constitute at least:

• A) 10% of the combined revenue of all operating segments.
• B) 75% of the combined revenue of all operating segments.
• C) 10% of the combined revenue from sales to unaffiliated customers of all operating segments.
• D) 75% of the combined revenue from sales to unaffiliated customers of all operating segments.

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Definitions:

Variable Costs

Expenses that fluctuate with the level of output, including costs such as raw materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales.

Contribution Margin

The amount by which sales revenue exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.

Variable Costs

Variable costs that change in direct correlation with production output or sales figures, like labor costs and materials expenses.