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?
