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

Allocable costs for the year were $54,000.Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs.The 20X3 operating profit for Segment A was
A) $196,000
B) $223,000
C) $225,000
D) $250,000

Question

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

Allocable costs for the year were $54,000.Allocable costs are assigned based on the ratio of a segment's income before allocable costs to total income before allocable costs.The 20X3 operating profit for Segment A was
A) $196,000 
B) $223,000 
C) $225,000 
D) $250,000

Quizplus · Accepted Answer

To find the operating profit for Segment A, we need to calculate the segment's income before allocable costs:

Segment A revenue = $700,000
Segment A expenses = ($400,000 + $200,000) = $600,000
Segment A income before allocable costs = $700,000 - $600,000 = $100,000

Then we need to calculate the total income before allocable costs for all segments:

Total revenue = $2,800,000
Total expenses = ($1,600,000 + $800,000) = $2,400,000
Total income before allocable costs = $2,800,000 - $2,400,000 = $400,000

Next, we can use the ratio of Segment A's income before allocable costs to the total income before allocable costs to allocate the $54,000 of allocable costs:

Segment A's allocation = ($100,000 / $400,000) x $54,000 = $13,500

Finally, we can subtract the allocated costs from Segment A's income before allocable costs to get its operating profit:

Segment A operating profit = $100,000 - $13,500 = $86,500

Therefore, the correct answer is C) $225,000 (Segment A operating profit + Segment B operating profit + Segment C operating profit = $86,500 + $72,000 + $66,500 = $225,000).

Tuttle Company Discloses Supplementary Operating Segment Information for Its Three