Question

Tecumseh Co. (Tecumseh), a pubLiCly owned corporation, assesses performance and makes operating decisions using the following information for its reportable segments: Total revenues 768,000 Total profit and loss 40,600 Included in the total profit and loss are intersegment profits of 6,100. In addition, Tecumseh has 500 of common costs for its reportable segments that are not allocated in reports used internally. For purposes of segment reporting, Tecumseh should report total combined segment profit of:

Answer 1

To calculate Tecumseh Co.'s total combined segment profit for segment reporting, subtract intersegment profits and unallocated common costs from the total profit and loss. The result is 34,000, which is the reported total combined segment profit.

Step-by-step explanation:

The student's question is related to segment reporting for Tecumseh Co., a publicly owned corporation. To report the total combined segment profit, one must consider the total profits and loss, adjust for intersegment profits, and account for any common costs that are not allocated in the internal reports. Tecumseh's given total profit and loss is 40,600, from which we subtract the intersegment profits of 6,100. We then need to factor in the common costs of 500 that are not allocated internally to arrive at the final combined segment profit. Therefore, the calculation would be: 40,600 (total profit and loss) - 6,100 (intersegment profits) - 500 (common costs) = 34,000. This is the total combined segment profit that should be reported by Tecumseh.