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

question 140

Multiple Choice

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

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Definitions:

Effective Interest Method

A technique used in accounting to allocate the interest expense or income over the life of a financial instrument such as a bond or a loan.

Bond Premium

The amount by which the market price of a bond exceeds its face value, often because it offers an interest rate higher than the current market rates.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date at a predetermined call price.

Term Bond

A bond that reaches its maturity date at the same time, where the principal amount is due in a lump sum at the end.