Clay Company has three lines of business, each of which was determined to be reportable segment. Sales aggregated P7,500,000 in the current year, of which Segment One contributed 40%. Traceable costs were P1,750,000 for Segment One out of a total of P5,000,000 for the entity as a whole. The entity allocates common costs of P1,500,000 based on the ratio of a segment's income before common costs to the total income before common costs. What amount should be reported as operating profit for Segment One?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Clay Company: What amount should be reported as operating profit for Segment One? *
 
a. 1250000
b. 1000000
c. 650000
d. 500000
Problem 10-8 (AICPA Adapted)
Clay Company has three lines of business, each of which was
determined to be reportable segment.
Sales aggregated P7,500,000 in the current year, of which
Segment One contributed 40%.
Traceable costs were P1,750,000 for Segment One out of a total
of P5,000,000 for the entity as a whole.
The entity allocates common costs of P1,500,000 based on
the ratio of a segment's income before common costs to the
total income before common costs.
What amount should be reported as operating profit for
Segment One?
Transcribed Image Text:Problem 10-8 (AICPA Adapted) Clay Company has three lines of business, each of which was determined to be reportable segment. Sales aggregated P7,500,000 in the current year, of which Segment One contributed 40%. Traceable costs were P1,750,000 for Segment One out of a total of P5,000,000 for the entity as a whole. The entity allocates common costs of P1,500,000 based on the ratio of a segment's income before common costs to the total income before common costs. What amount should be reported as operating profit for Segment One?
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