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Operations of Borderland Oil Drilling Services are separated into two geographical divisions: United States and Mexico. The operating results of each division for the year
Operations of Borderland Oil Drilling Services are separated into two geographical divisions: United States and Mexico. The operating results of each division for the year are as follows: United States Mexico Total Sales $ $ $ Variable costs Contribution margin $ $ $ Direct fixed costs Segment margin $ $ $ Corporate fixed costs Operating income loss $ $ $ Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a divisions direct fixed costs could be avoided by eliminating that division. Because the US division is operating at a loss, Borderlands president is considering eliminating it a If the US division had been eliminated at the beginning of the year, what would have been Borderlands pretax income? $ Answer b Recast the income statements into a more meaningful format than the one given. Note: Use a negative sign for expenses and losses.
Operations of Borderland Oil Drilling Services are separated into two geographical divisions: United States and Mexico. The operating results of each division for the year are as follows:
United States Mexico Total
Sales $ $ $
Variable costs
Contribution margin $ $ $
Direct fixed costs
Segment margin $ $ $
Corporate fixed costs
Operating income loss $ $ $
Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a divisions direct fixed costs could be avoided by eliminating that division. Because the US division is operating at a loss, Borderlands president is considering eliminating it
a If the US division had been eliminated at the beginning of the year, what would have been Borderlands pretax income? $
Answer
b Recast the income statements into a more meaningful format than the one given.
Note: Use a negative sign for expenses and losses.
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