Norte Company has three manufacturing divisions, each of which has been Determined to be reportable segment. Common costs are appropriately allocated on the basis of each division’s sales in relation to Norte’s aggregate sales. In the current year, Division 1 had sales of P6,000,000, which was 20%of Norte’s total sales, and had traceable cost of P3,800,00. Norte incurred operating cost of P1,000,000 that were not directly traceable to any of the divisions. In addition, Norte incurred interest expense of P600,000. In reporting segment information, what amount should be shown as operating profit of Division 1 for the current year? CHOICES: P1,880,000 P1,400,000 P2,000,000 P2,200,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
In reporting segment information, what amount should be shown as operating profit of Division 1 for the current year?
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