Problem #3 In the rail transportation business, the critical activity measure for business activity is ton miles, that is, a measure of miles that tons of cargo have been transported. 3a) Assuming the following data for the Lehigh Valley Railroad Company, use the high-low method to determine variable cost per ton mile and fixed costs for the company. 3b) Express the specific total cost equation for the railroad mathematically. 3c) Calculate the RR's total costs for September, assuming ton miles of 525,000. Total Costs ($000) Month Ton Miles February 265,000 26,830 March 325,000 30,750 April 315,000 28,560 May 450,000 36,270 June 540,000 39,240 July 505,000 37,920 August 550,000 41,490

Problem #3 In the rail transportation business, the critical activity measure for business activity is ton miles, that is, a measure of miles that tons of cargo have been transported. 3a) Assuming the following data for the Lehigh Valley Railroad Company, use the high-low method to determine variable cost per ton mile and fixed costs for the company. 3b) Express the specific total cost equation for the railroad mathematically. 3c) Calculate the RR's total costs for September, assuming ton miles of 525,000. Total Costs ($000) Month Ton Miles February 265,000 26,830 March 325,000 30,750 April 315,000 28,560 May 450,000 36,270 June 540,000 39,240 July 505,000 37,920 August 550,000 41,490

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 17E: Variable costing income statement for a service company East Coast Railroad Company transports...

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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: Operating statistics from the management information system reveal the following for April: 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. B. Evaluate the route performance of the railroad using the report in (A).
High-Low Method for a Service Company 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.
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QUESTION 2: ABSORPTION AND VARIABLE COSTING AND BUDGETING ( Good Toys Company produces a toy product. Data concerning the company’s operations last year appear below: Units in beginning inventory 0 Units produced 15,000 Units sold 12,000 Selling price per unit $110 Variable cost per unit: Direct materials $30 Direct labour $20 Variable manufacturing overhead $10 Variable selling and administrative costs $8 Fixed costs in total: Fixed manufacturing overhead $225,000 Fixed selling and administrative costs $280,000 Required (show your calculations):Prepare a variable costing income statement for the year. Type in answers to Question 2. a. (expand the space as needed) Client Solutions is working on its direct labour…
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 $1,776,000 560,000 February 2,700,000 1,000,000 March 1,650,000 500,000 April 1,860,000 600,000 May 1,440,000 400,000 June 1,566,000 460,000 Determine the variable cost per gross-ton mile and the total fixed cost. Variable cost (If required, round to two decimal places.) $fill in the blank 1 per gross-ton mile Total fixed cost $fill in the blank 2
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