Managerial Accounting
Managerial Accounting
14th Edition
ISBN: 9781337270595
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 6, Problem 20E

Variable costing income statement for a service company

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:

Chapter 6, Problem 20E, Variable costing income statement for a service company East Coast Railroad Company transports , example  1

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

Chapter 6, Problem 20E, Variable costing income statement for a service company East Coast Railroad Company transports , example  2

  1. A. Prepare a contribution margin by route report for East Coast Railroad Company for the month of April. Compute the contribution margin ratio in whole percents, rounded to one decimal place.
  2. B. Evaluate the route performance of the railroad using the report in (A).
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