determine the volume of revenues that a single customer must generate to necessitate 591531

Aug 29, 2021 | Uncategorized

Battey Corporation manufactures several products: natural fibers, synthetic fibers, leather, plastics, and wood. It is organized into five operating divisions based on these different products. The company has a number of subsidiaries that perform operations throughout the world. At the end of 2011 as part of the internal reporting process, Battey reported the revenues, profits, and assets (in millions) to the chief operating decision maker:

Revenues by Operating Segment

United
States

Canada

Mexico

France

Italy

Brazil

Natural fibers:

Sales to external customers

$1,739

–0–

$342

$606

–0–

$1,171

Intersegment sales

–0–

–0–

–0–

–0–

–0–

146

Synthetic fibers:

Sales to external customers

290

$116

–0–

–0–

–0–

37

Intersegment sales

12

5

–0–

–0–

–0–

–0–

Leather:

Sales to external customers

230

–0–

57

–0–

$278

55

Intersegment sales

22

–0–

9

–0–

34

9

Plastics:

Sales to external customers

748

286

–0–

83

92

528

Intersegment sales

21

12

–0–

–0–

–0–

72

Wood:

Sales to external customers

116

22

–0–

–0–

–0–

149

Intersegment sales

17

3

–0–

–0–

–0–

28

Operating Profit or Loss
by Operating Segment

United
States

Canada

Mexico

France

Italy

Brazil

Natural fibers

$526

–0–

$92

$146

–0–

$404

Synthetic fibers

21

$8

–0–

–0–

–0–

10

Leather

70

–0–

27

–0–

$94

24

Plastics

182

74

–0–

18

24

68

Wood

18

5

–0–

–0–

–0–

37

Assets by Operating Segment

United States

Canada

Mexico

France

Italy

Brazil

Natural fibers

$1,005

–0–

$223

$296

–0–

$817

Synthetic fibers

163

$50

–0–

–0–

–0–

74

Leather

146

–0–

41

–0–

$150

38

Plastics

425

173

–0–

54

58

327

Wood

66

19

–0–

–0–

–0–

143

Required

a. Determine the operating segments that should be reported separately in Battey’s 2011 financial statements.

b. Determine the geographic areas for which Battey should report revenues separately in its 2011 financial statements. Assume that Battey has elected to define a material country as one in which sales to external customers are 10 percent or more of consolidated sales.

c. Determine the volume of revenues that a single customer must generate to necessitate disclosure of a major customer.