Variable Costing Income Statement for a Service Company East Coast Railroad Comp
ID: 2433253 • Letter: V
Question
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. Calculate the contribution margin ratio, rounded to one decimal place.
Cost Amount Cost Behavior Activity Rate Labor costs for loading and unloading railcars $186,930 Variable $46.50 per railcar Fuel costs 399,040 Variable 11.60 per train-mile Train crew labor costs 233,920 Variable 6.80 per train-mile Switchyard labor costs 123,414 Variable 30.70 per railcar Track and equipment depreciation 198,100 Fixed Maintenance 132,100 FixedExplanation / Answer
East Coast Railroad Company Contribution Margin by Route For the Month Ended April 30 Atlanta/Baltimore Baltimore/Pittsburgh Pittsburgh/Atlanta Total Revenues 325710 525760 509270 1360740 Variable costs: Labor costs for loading and unloading railcars 29295 98580 59055 186930 Fuel costs 140128 110432 148480 399040 Train crew labor costs 82144 64736 87040 233920 Switchyard labor costs 19341 65084 38989 123414 Total variable costs 270908 338832 333564 943304 Contribution margin 54802 186928 175706 417436 Contribution margin ratio 16.8% 35.6% 34.5% 30.7%
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