20hw eBook Contribution Margin Reporting and Analysis-Service Company East Coast

Question

20hw eBook Contribution Margin Reporting and Analysis-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 2014, are as follows: Cost Labor costs for loading and unloading railcars Fuel costs Train crew labor costs Switchyard labor costs Track and equipment depreciation Maintenance Amount Cost Behavlor Variable$46.00 per railcar Activity Rate 175,582 460,226 267,228 118,327 194,400 129,600 $1,345,363 Variable Variable Variable Fixed Fixed 12.40 per train-mile 7.20 per train-mile 31.00 per railcar Operating statistics from the management information system reveal the following for April: Atlanta/ Baltimore/ Pittsburgh/ PttsburghAtlanta 14,080 1,232 $440 Baltimore Pittsburgh Total Number of train-miles Number of railcars Revenue per railcar 12,835 425 $600 10,200 2,160 $275 37,115 3,817

Explanation / Answer

b. Contribution Margin Report Amount i Planned contribution margin $     (29,291) ii Effect of change in sales a. Sales quantity factor $165,000 (700 – 425) × $600 = $ 165,000 b. Unit price factor   ($500 – $600) × 700= $ (70,000) $       95,000 iii Effect of changes in variable cost of goods sold a.Variable cost quantity factor (425 – 700) × $77 = $   21,175 b. Unit cost factor   ($77 – $77) × 700 = $       21,175 iv Actual Contribution Margin   ( i+ii+iii) $       44,534

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