Explain What an "Operating Segment" Is

question 27

Essay

Explain what an "operating segment" is.
For each of the examples below,determine what operating segments the company has and why?
a.A beverage company sells beer,wine and bottled water.The beer and wine are sold through liquor store outlets and directly to restaurants.The bottled water is sold to retailers.
b.A company sells leather apparel.The company designs,manufactures and retails these goods through their own retail outlets.There are primarily three divisions: (1)designing and sourcing and purchasing various raw materials;(2)manufacturing;and (3)distribution and retail.The design and raw materials flow through to the manufacturing division.All output of the manufacturing division is transferred to the distribution and retail division.Only the distribution and retail division has external revenues.The other divisions have internal revenues only.

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Definitions:

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