Question

2.) Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed “gross-ton miles,” which is the total number of tons multiplied by the miles moved.

	Transportation Costs		Gross-Ton Miles
January	$896,400		265,000
February	999,400		296,000
March	706,300		192,000
April	958,200		287,000
May	803,600		231,000
June	1,030,300		312,000

Determine the variable cost per gross-ton mile and the fixed cost.

Variable cost (Round to two decimal places.)	$ per gross-ton mile
Total fixed cost

3.) For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales	$31,900
Food and packaging	$12,490
Payroll	8,000
Occupancy (rent, depreciation, etc.)	5,850
General, selling, and administrative expenses	4,600
	$30,940
Income from operations	$960

Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses.

a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.)
$ million

b. What is Wicker Company's contribution margin ratio? Round to one decimal place.
%

c. How much would income from operations increase if same-store sales increased by $1,900 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million.
$ million

4.) Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $369,000, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows:

Products	Unit Selling Price		Unit Variable Cost
Bats	$60		$50
Gloves	150		90

a. Compute the break-even sales (units) for both products combined.
units

b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point?

Baseball bats	units
Baseball gloves	units

Answer 1