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

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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:

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
Transcribed Image Text: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
Transcribed Image Text: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
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