A Company That Generates Reports by Both Geographic Region and Product

question 48

Multiple Choice

A company that generates reports by both geographic region and product line must consider additional criteria in identifying operating segments when there are multiple sets of reports. Which of the following statement(s) is correct?
(I) ) An operating segment has a segment manager who is directly accountable to the chief operating decision maker for its financial performance.
(II) ) If more than one set of organizational units exists, each organizational unit is considered an operating segment even if there is only one set for which segment managers are held responsible.
(III.) If segment managers exist for two or more overlapping sets of organizational units, the nature of the business activities must be considered.

• A) I, II, and III.
• B) I and III only.
• C) I and II only.
• D) II and III only.
• E) None of these.

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Definitions:

Budgeting

The process of creating a plan to spend your money, creating an estimate of revenues and expenses over a specified period.

Revenue and Spending Variances

The difference between projected and actual figures for income and expenditures, used to manage and adjust financial planning.

Equipment Depreciation

The process of allocating the cost of tangible assets over their useful lives, representing wear and tear on equipment.

Machine-hours

The measurement of the amount of time machines are used in the manufacturing process, rephrased as "The cumulative operational time of machines for production."