Question

A financial analyst for Simon Manufacturing prepared the following report:

Customers	Customer- Level Operating Income	Customer Revenue
A	$5646.00	$26,250
B	$4773.00	$30,000
C	$3705.00	$15,000
D	$1155.50	$7,300
E	$984.80	$5,100
F	$844.80	$4,400
G	$336.60	$1,800
H	$252.00	$4,500
I	($168.00)	$2,400
J	($676.00)	$2,600

Which of the following conclusions can be drawn from the report?

	A.	All profitable customers achieve customer level operating income in excess of 20%
	B.	Customer B has the second highest operating income margin
	C.	The cumulative customer-level operating income of the top eight customers represents about 105.0% of operating income
	D.	All customers provide positive contribution towards profitability

Answer 1

Answer is option c) The cumulative customer-level operating income of the top eight customers represents about 105.0% of operating income 2B Customer Cumulative Level Customer-Level Customers Operating Operating Income 1 A $ 5,645 5,645 $ 4,773 $ 10,418 $ 3,705 14,123 $ 1,156 $ 15,279 $ 985 $ 16,263 $ 845 $ 17,108 337 $ 17,445 252 $ 17,697 91 $ (168) $ 17,529 10) $ (676) $ 16,853 Cumulative customer-level operating income of the top eight customers = = (17696.7 /16852.7) x 100 = 105% The cumulative customer-level operating income of the top eight customers represents about 105.0% of operating income