East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs, their cost behavior, and activity rates for April are as follows: Cost Amount Cost Behavior Activity Rate Labor costs for loading and unloading railcars $175,582 Variable $46.00 per railcar Fuel costs 460,226 Variable 12.40 per train-mile Train crew labor costs 267,228 Variable 7.20 per train-mile Switchyard labor costs 118,327 Variable 31.00 per railcar Track and equipment depreciation 194,400 Fixed Maintenance 129,600 Fixed $1,345,363 Operating statistics from the management information system reveal the following for April: Atlanta/Baltimore Baltimore/Pittsburgh Pittsburgh/Atlanta Total Number of train-miles 12,835 10,200 14,080 37,115 Number of railcars 425 2,160 1,232 3,817 Revenue per railcar $600 $275 $440 The management of East Coast Railroad Company improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from $600 to $500. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 275 railcars to a total of 700 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged. Required: a. Prepare a contribution margin report for the Atlanta/Baltimore route for May. Calculate the contribution margin ratio in percentage terms to one decimal place.* b. Prepare a contribution margin analysis to evaluate management’s actions in May. Assume that the May planned quantity, price, and unit cost was the same as April. If an amount is zero, enter "0".* *Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs, their cost behavior, and activity rates for April are as follows: Cost Amount Cost Behavior Activity Rate Labor costs for loading and unloading railcars $175,582 Variable $46.00 per railcar Fuel costs 460,226 Variable 12.40 per train-mile Train crew labor costs 267,228 Variable 7.20 per train-mile Switchyard labor costs 118,327 Variable 31.00 per railcar Track and equipment depreciation 194,400 Fixed Maintenance 129,600 Fixed $1,345,363 Operating statistics from the management information system reveal the following for April: Atlanta/Baltimore Baltimore/Pittsburgh Pittsburgh/Atlanta Total Number of train-miles 12,835 10,200 14,080 37,115 Number of railcars 425 2,160 1,232 3,817 Revenue per railcar $600 $275 $440 The management of East Coast Railroad Company improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from $600 to $500. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 275 railcars to a total of 700 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged. Required: a. Prepare a contribution margin report for the Atlanta/Baltimore route for May. Calculate the contribution margin ratio in percentage terms to one decimal place.* b. Prepare a contribution margin analysis to evaluate management’s actions in May. Assume that the May planned quantity, price, and unit cost was the same as April. If an amount is zero, enter "0".* *Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cost	Amount	Cost Behavior	Activity Rate
Labor costs for loading and unloading railcars	$175,582	Variable	$46.00 per railcar
Fuel costs	460,226	Variable	12.40 per train-mile
Train crew labor costs	267,228	Variable	7.20 per train-mile
Switchyard labor costs	118,327	Variable	31.00 per railcar
Track and equipment depreciation	194,400	Fixed
Maintenance	129,600	Fixed
	$1,345,363

Operating statistics from the management information system reveal the following for April:

	Atlanta/Baltimore	Baltimore/Pittsburgh	Pittsburgh/Atlanta	Total
Number of train-miles	12,835	10,200	14,080	37,115
Number of railcars	425	2,160	1,232	3,817
Revenue per railcar	$600	$275	$440

The management of East Coast Railroad Company improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from $600 to $500. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 275 railcars to a total of 700 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged.

Required:

Prepare a contribution margin report for the Atlanta/Baltimore route for May. Calculate the contribution margin ratio in percentage terms to one decimal place.*

Prepare a contribution margin analysis to evaluate management’s actions in May. Assume that the May planned quantity, price, and unit cost was the same as April. If an amount is zero, enter "0".*

*Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if it is required. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

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