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 $7,200,000 $3,600,000 $10,800,000 Variable costs (4,740,000) (2,088,000) (6,828,000) Contribution margin $2,460,000 $1,512,000 $3,972,000 Direct fixed costs (800,000) (490,000) (1,290,000) Segment margin $1,660,000 $1,022,000 $2, 682,000 Corporate fixed costs (1,900,000) (890, 000) (2,790,000) Operating income (loss) S(240,000) $132,000 S (108,000) Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a division's direct fixed costs could be avoided by eliminating that division. Because the U.S. division is operating at a loss, Borderland's president is considering eliminating it. a. If the U.S. division had been eliminated at the beginning of the year, what would have been Borderland's pre- tax income? S 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 $7,200,000 $3,600,000 $10,800,000 Variable costs (4,740,000) (2,088,000) (6,828,000) Contribution margin $2,460,000 $1,512,000 $3,972,000 Direct fixed costs (800,000) (490,000) (1,290,000) Segment margin $1,660,000 $1,022,000 $2, 682,000 Corporate fixed costs (1,900,000) (890, 000) (2,790,000) Operating income (loss) S(240,000) $132,000 S (108,000) Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a division's direct fixed costs could be avoided by eliminating that division. Because the U.S. division is operating at a loss, Borderland's president is considering eliminating it. a. If the U.S. division had been eliminated at the beginning of the year, what would have been Borderland's pre- tax income? S Answer b. Recast the income statements into a more meaningful format than the one given. Note: Use a negative sign for expenses and losses.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter11: Performance Evaluation And Decentralization
Section: Chapter Questions
Problem 32E: Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions:...
Related questions
Question
A8
![Sales
Variable costs
Direct fixed costs
Segment margin
Corporate fixed costs
Operating income (loss)
United States
$
$
0 x $
0 x
0x
0 x $
Mexico
0 x $
0x
0x
0 x $
$
Total
0x
0x
0x
0x
0x
0x](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F34e0ecd6-995c-404a-a32f-5bb7ef42c93e%2Ffbeb1be1-4409-45f6-a706-4f82a56cd3e8%2F4pjgt3g_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Sales
Variable costs
Direct fixed costs
Segment margin
Corporate fixed costs
Operating income (loss)
United States
$
$
0 x $
0 x
0x
0 x $
Mexico
0 x $
0x
0x
0 x $
$
Total
0x
0x
0x
0x
0x
0x
![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 $7,200,000 $3,600,000 $10, 800,000 Variable costs (4,740, 000) (2,088, 000) (6, 828,000) Contribution margin $2,460, 000 $1,512,000 $3,972, 000 Direct fixed costs
(800,000) (490, 000) (1, 290, 000) Segment margin $1,660,000 $1,022, 000 $2, 682,000 Corporate fixed costs (1,900,000) (890, 000) (2,790, 000) Operating income (loss) $(240, 000) $132,000 $
(108,000) Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a division's direct fixed costs could be avoided by eliminating that division. Because the U.S. division
is operating at a loss, Borderland's president is considering eliminating it. a. If the U.S. division had been eliminated at the beginning of the year, what would have been Borderland's pre- tax 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F34e0ecd6-995c-404a-a32f-5bb7ef42c93e%2Ffbeb1be1-4409-45f6-a706-4f82a56cd3e8%2Fzk8jkqo_processed.png&w=3840&q=75)
Transcribed Image Text: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 $7,200,000 $3,600,000 $10, 800,000 Variable costs (4,740, 000) (2,088, 000) (6, 828,000) Contribution margin $2,460, 000 $1,512,000 $3,972, 000 Direct fixed costs
(800,000) (490, 000) (1, 290, 000) Segment margin $1,660,000 $1,022, 000 $2, 682,000 Corporate fixed costs (1,900,000) (890, 000) (2,790, 000) Operating income (loss) $(240, 000) $132,000 $
(108,000) Corporate fixed costs are allocated to the divisions based on relative sales. Assume that all of a division's direct fixed costs could be avoided by eliminating that division. Because the U.S. division
is operating at a loss, Borderland's president is considering eliminating it. a. If the U.S. division had been eliminated at the beginning of the year, what would have been Borderland's pre- tax 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.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning