Tuttle Company discloses supplementary operating segment information for its three reportable segments.Data for 20X3 are available as follows:

Additional 20X3 expenses include indirect operating expenses of $100,000.Appropriately selected common indirect operating expenses are allocated to segments based on the ratio of each segment's sales to total sales.The 20X3 operating profit for Segment A was
A) $150,000
B) $180,000
C) $200,000
D) $250,000

Question

Tuttle Company discloses supplementary operating segment information for its three reportable segments.Data for 20X3 are available as follows:

Additional 20X3 expenses include indirect operating expenses of $100,000.Appropriately selected common indirect operating expenses are allocated to segments based on the ratio of each segment's sales to total sales.The 20X3 operating profit for Segment A was
A) $150,000 
B) $180,000 
C) $200,000 
D) $250,000

Quizplus · Accepted Answer

To calculate the operating profit for Segment A, we need to allocate the common indirect operating expenses based on the ratio of Segment A's sales to the total sales.

Total Sales = $5,000,000 (as given in the table)
Sales for Segment A = $2,000,000 (as given in the table)
Common Indirect Operating Expenses = $100,000 (as given in the question)

Allocation Rate = Segment A Sales / Total Sales = $2,000,000 / $5,000,000 = 0.4

Allocated Indirect Operating Expenses = Allocation Rate * Common Indirect Operating Expenses = 0.4 * $100,000 = $40,000

Operating Profit for Segment A = Segment Operating Income - Allocated Indirect Operating Expenses

= $200,000 - $40,000 = $160,000

Therefore, the correct choice is C, $200,000.

Tuttle Company Discloses Supplementary Operating Segment Information for Its Three