Contribution margin reporting and analysis for a service company obj. 5, 6 The management of East Coast Railroad Company introduced in Exercise improved the profitability of the Atlanta/Baltimore route in May by reducing the price of a railcar from $600 to $500. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 275 railcars to a total of 700 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged.

a. Prepare a contribution margin report for the Atlanta/Baltimore route for May. Calculate the contribution margin ratio in percentage terms to one decimal place.

b. Prepare a contribution margin analysis to evaluate management’s actions in May.

Assume that the May planned quantity, price, and unit cost was the same as April.

Variable costing income statement and contribution margin analysis for a