In General,GAAP Encourages the Identification of Reportable Segments Based on the Following

question 19

Multiple Choice

In general,GAAP encourages the identification of reportable segments based on the following:

• A)Reported segments must account for at least 75% of all external and inter-segment sales.
• B)Reported segments must ideally account for at least 75% of all sales,unless there are many smaller divisions and separate reporting would create less clarity in reporting.
• C)If there are more than 10 reportable segments,the company should consider additional aggregation of their segments.
• D)Reported segments must account for 100% of the external sales,but only 75% of external and inter-segment sales.

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Definitions:

Contribution Margin

The difference between the sales revenue of a product and the variable costs associated with producing it, used to cover fixed costs and contribute to profit.

Variable Costing

An accounting method that only includes variable production costs—costs that change with production volume—in the cost of goods sold.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business within a certain range of activity.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead.