Question

In: Accounting

East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs,...

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
Total Amount $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

Instructions

1. 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. Discuss the route performance of the railroad using the above report.

Note: add citations when necessary.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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