A Segment of an Organization Is Any Part of the Organization

question 153

Essay

A segment of an organization is any part of the organization that management wishes to evaluate. Segment margin income statements highlight the elements under the segment manager’s control.

Required:

a. What is “segment margin” and how is it calculated?

b. What is the difference between “segment margin” and a segment’s “net operating income?”

c. Why are common allocated fixed costs an issue in evaluating the performance of a segment manager?

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Definitions:

Breast Milk

The milk produced by a woman's breasts after childbirth, providing essential nutrients and antibodies to infants.

Pre-Eclampsia

A life-threatening disease that can afflict pregnant women. It is characterized by high blood pressure.

Prenatal Care

Medical and healthcare provided to expectant mothers during pregnancy to ensure the health of both the mother and the fetus.

Rubella

A viral infection that can cause retardation and heart disease in the embryo. Also called German measles.