Will someone please help with these assignments 1. Operating profit test Pong in

Question

Will someone please help with these assignments

1. Operating profit test

Pong industries operations involve four operating segments. A,B,C and D. During the past year, the operating profit (loss) of each segment was

Segment                                                                              Operating profit (loss)

A                                                                                                             $(600)

B                                                                                                             100

C                                                                                                             900

D                                                                                                             (700)

Required:

Applying the operating profit or loss test, determine which of the segments are reportable segments?

2. Revenue test

Mane company operates in five identifiable segments, V,W,X,Y, and Z. during the past year, sales to unaffiliated customers and intersegment sales for each segment were as follow

Segment              Sales to nonaffiliates                      Intersegment sales         Total sales

V                             $2,000                                                  $ 400                                           $2,400

W                               280                                                          20                                             300

X                                100                                                          600                                             700

Y                                 1,100                                                        0                                                1,100

Z                                 350                                                           25                                                375

                                $3,830                                                    $1,045                                        $$4,875        

Applying the revenue test, determine which of the segments are reportable segments

Explanation / Answer

Hi,

Please find the answer as follows:

Part A:

Reportable Segments are those whose Absolute Operating Profit/Loss Dollar Value is more than 10% of Combined Segment Operating Losses of 1300 (600 + 700)

Going by the above rule, A, C and D are reportable segments. It is so because the Operating Profit/Loss of all these segments is more than 10% of 1300, that is 130.

Answer for Part A is A, C and D.

Part B:

Reportable Segments are those whose Absolute Sales Revenue Dollar Value is more than 10% of Combined Sales Revenue of all the Segments.

V's% = 2400/4875*100 = 49.23%

W's% = 300/4875*100 = 6.15%

X% = 700/4875*100 = 14.36%

Y% = 1100/4875*100 = 22.56%

Z% = 375/4875*100 = 7.69%

Going by the rule, the reportable segments are V, X and Y.

Answer is V, X and Y.

Thanks.

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