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13213213operating Segment

Norte Company has three manufacturing divisions that are reportable segments. Division I had sales of P6,000,000 which was 20% of Norte's total sales, and operating costs of P3,800,000. Norte incurred P1,000,000 in operating costs not allocated to divisions. It also incurred P600,000 in interest expense. To determine Division I's operating profit, allocate a proportion of common costs based on Division I's sales, but do not allocate general corporate expenses.

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1K views

13213213operating Segment

Norte Company has three manufacturing divisions that are reportable segments. Division I had sales of P6,000,000 which was 20% of Norte's total sales, and operating costs of P3,800,000. Norte incurred P1,000,000 in operating costs not allocated to divisions. It also incurred P600,000 in interest expense. To determine Division I's operating profit, allocate a proportion of common costs based on Division I's sales, but do not allocate general corporate expenses.

Uploaded by

Glen Javellana
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Additional current year expenses, not included above, 17.

Norte Company has three manufacturing divisions,


are as follows: each of which has been determined to be a reportable
Indirect operating expenses P360,000 segment. Common costs are appropriately allocated
on the basis of each division's sales in re lation to
General corporate expenses 240,000
Norte's aggregate sales. In the current year, Division I
had sales of P6,000,000, which was 20% of Norte's
total s ale s, and had tr aceab le operat ing cost s of
In the measure of segment profit or loss reviewed by P3, 800, 000. Nort e incurr ed ope rat ing cost s of
t h e c h ie f o p e r a t in g d e c is io n m a k e r , a p p r o p r ia t e P1,000,000 that were not directly traceable to any of
common operating expenses are allocated to segments
based on the ratio of a segment's sales to total sales, the divisions. In addition, Norte incurred interest
expense of P600,000. In r ep or t in g s eg me nt
but general corporate expenses are not. Segment C's
in fo r ma t io n -, w hat a mo u nt s ho u ld be sh o wn as
current year profit for external reporting purposes was
operatinq profit of Division. I for the current year?
a. P100,000 c. P 1 6 0, 0 0 0
a. P2,000,000 c. P1 : 880,000
b. P130,000 d. P250,000
b . P 1, 40 0, 0 0 0 d. P2,20 0,0 00

DRILL
1. Australia Company has three business segments with In its segment information, which is(are) reportable
the following Information: segment(s)?
a. Segment 1, 2, 3, 4, & 5
One Two Three b. Segment 1, 2, 3 & 4
Sales to outsiders P8,000,000 P4,000,000 P6,000,000 c. Segment 1, 2 & 4
Intersegment d. Segment 3 & 5
transfers 600,000 1,000,000 1,400,000
Interest income - The following segments have been identified for an
outsiders 400,000 500,000 600,000 entity, along with their sales. No segment qualifies on
Interest income - any other criteria for determining reportable segments.
Intersegment loans 300,000 400,000 500,000 Sales for each segment and the total for the entity
follow:
What is the minimum amount of revenue that each of
those segments must have to be ccnsicered Seg- External Inter-segment
ment Sales Sales Total
reportable'?
a. P1,950,000 c. P2,2 50. 000 1 P10,000,000 P 3,000,000 P13,000,000
0. P2,100,000 d. P2,37 0,0 00 2 2,000,000 1,500,000 3,500,000
3 2,600,000 1,100,000 3,700,000-
2 In preparing its segment-reporting schedule, the High 4 4,700,000 2,300,000 7,000,000"
Corporation has developed the following information 5 2,800,000 500,000 3,300,000
for each of its 5 segments: 6 3,000,000 700,000 3,700,000-
7 4,400,000 1,400,000 5,800,000-
Segment Revenue Expenses P30,000,000 P10,000,000 P40,000,000
1 P1,400,000 P 800,000
2 1,200,000 1,300,000 What is the minimum number of reportable segments
3 900,000 750,000 for this entity?
4 1,500,000 1,900,000 a. J c. 5
5 500,000 220,000 b, 4 d. 6
Total P5,500, 000 P4,970,000

The reportable business segment(s) using the segment


result test is (are) 5 . C D O C o m p a n y , a p u b lic ly o w n e d c o r p o r a t io n , is
a. Segm ent s 1, 2, 3, 4 & 5 subject to the requirements for segment reporting. In
b. Segment 1, 2, 3 & 4 its income statement for the current year ended, CDO
c. Segments 1, 3, & 5 reported revenue of P150,000,000, operating expenses
-d. Segments 1, 3, 4 & 5 of P10 0,000,000 and net income of P50,000,00 0.
O perating expenses include payroll costs of
P20,000,000. CDO's combined identifiable assets of all
3. Fragment Corporation and its divisions are engaged industry segments at year end were P80,000,000. The
solely in manufacturing. The following data pertain to reported revenue includes P120,000,0000 of sales to
the industries in which operations were conducted for external customers. External revenue reported by
current year: operating segments must be at least
Operating Profit (Loss) a. P11 2,50 0,00 0 c. P 9 0, 0 3 0, 0 00
Segment 1 8,000,000" b. P 37,500,000 d. P 5 0, 00 0 ,0 0 0
2 2,000,000
3 (1,300,000)
4 3,000,000
5 (1,000,000)
SUGGESTED ANSWER

1. D
2. D
3. D
4. D
5. A
6. C
7. A
8. C
9. B
10. D
11. A
12. D
13. A
14. B
15. B
16. C
17. A

DRILL
1. B
2. D
3. B
4. C
5. C

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