Natarajan, Inc. had the following operating segments, with the indicated amounts

Question

Natarajan, Inc. had the following operating segments, with the indicated amounts of segment revenues and segment expenses:

For purposes of the profit or loss test, segment C's operating profit or (loss) is

Question 1 options:

($200,000)

$700,000

$2,000,000

$1,300,000

($200,000)

$700,000

$2,000,000

$1,300,000

External Revenues 7,500,000 2,900,000 Intersegment Sales Segment Segment Expenses S 600,000 1,000,000 1,300,000 250,000 800,000 S 6,300,000 700,000 4,000,000 1,600,000 4,300,000 2,200,000 4,100,000 2,700,000

Explanation / Answer

The Answer is “ ($200,000) “

Segment C's operating profit or (loss) = Total Segment Sales – Segment Expenses

= [Intersegment Sales + External Revenues] - Segment Expenses

= [$13,00,000 + 700,000] - $22,00,000

= $20,00,000 – 22,00,000

= ($200,000) - LOSS

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