Question

Question 20

Carla Vista Company's condensed income statement is presented below:

Revenues					$906,000
Expenses
	Cost of goods sold		$400,000
	Operating and administrative expenses		165,000
	Depreciation expense		59,500		624,500
Income before taxes					281,500
Income tax expenses					78,000
Net income					$203,500
Earnings per share (100,000 shares)					$2.04

The following data is compiled relative to Carla Vista's operating segments:

		Percent Identified with Segment
		Hotels			Grains			Candy
Revenues		42	%		50	%		8	%
Cost of goods sold		50			48			2
Operating and administrative expense		36			50			14
Depreciation expense		42			41			17

Included in the amounts allocated to each segment on the above percentages are the following expenses which relate to general corporate activities:

		Operating Segment
		Hotels			Grains			Candy			Totals
Operating and administrative expense		$12,000			$9,400			$3,300			$24,700
Depreciation expense		4,100			4,800			4,100			13,000

(a)

Prepare a schedule showing the amounts distributed to each segment.

Operating Segment

Hotels

Grains

Candy

Totals

Revenues

$

$

$

$

Expenses

Cost of goods sold

Operating and admin. expense

Depreciation expense

Total expenses

Operating profit

$

$

$

$

Answer 1

	Operating Segment
	Hotels	Grains	Candy	Totals
Revenues	380,520	453,000	72,480	906,000
Expenses
Cost of goods sold	200,000	192,000	8,000	400,000
Operating and admin. expense	47,400	73,100	19,800	140,300
Depreciation expense	20,890	20,295	6,015	47,200
Total expenses	268,290	285,395	33,815	587,500
Operating profit	112,230	167,605	38,665	318,500
Working
Total times segment percentage
Operating and admin. Expense
Hotels (165,000 x 36%) - 12,000
Grains (165,000 x 50%) - 9,400
Candy (165,000 x 14%) - 3,300
Depreciation expense
Hotels (59,500 x 42%) - 4,100
Grains (59,500 x 41%) - 4,100
Candy (59,500 x 17%) - 4,100