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: Cost Behavior Activity Rate Cost Amount Labor costs for loading and unloading railcars $175,582 Variable $46.00 per railcar Variable 12.40 per train-mile Fuel costs 460,226 Train crew labor costs Variable 7.20 per train-mile 267,228 31.00 per railcar Switchyard labor costs Variable 118,327 Track and equipment depreciation Fixed 194,400 Maintenance 129,600 Fixed $1,345,363 Operating statistics from the management information system reveal the following for April: Atlanta/ Baltimore/ Pittsburgh/ Total Baltimore Pittsburgh Atlanta 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 a. Prepare a contribution margin by route report for East Coast Railroad Company for the month of April. Compute the contribution margin ratio. Rounded to one decimal place. If required, use the minus sign to indicate a negative contribution margin. East Coast Railroad Company Contribution Margin by Route For the Month Ended April 30 Atlanta/Baltimore Baltimore/Pittsburgh Pittsburgh/Atlanta Total Revenues Variable costs: Labor costs for loading and unloading railcars $ Fuel costs Train crew labor costs Switchyard labor costs Total variable costs Contribution margin % Contribution margin ratio b. Evaluate the route performance of the railroad using the report in (a). The route performs significantly worse than do the other two routes. A close examination of the operating statistics indicates that this route runs railcars, combined with fairly total mileage. This combination suggests that the railroad is running many trains on the railroad. That is, the railroad's profitability is sensitive to the size, or length, of the train in railcar terms. QOodddi