help please. Thank you
The president of Tennessee Railroad wants to obtain an overview of the company's operations, particularly with respect to comparing freight and passenger business. He has heard about "contribution" approaches to cost allocations that emphasize cost behavior patterns and contribution margins, contributions controllable by segment managers, and contributions by segments. The president has hired you as a consultant to help him. He has given you the following information. i (Click the icon to view the information.) i X Read the requirements. Requirements Requirement 1. The president asks you to prepare income statements, dividing the data for the company as a whole between the freight and dollars. Leave any unused cells blank. Do not enter a "0" for any zero-balances. Use a minus sign or parentheses for any negative contributic 1. The president asks you to prepare statements, dividing the data for the company as a Begin by preparing the income statement for the railroad as a whole, then show the income statements for the freight and passenger division: whole between the freight and passenger traffic and then subdividing the passenger traffic into three divisions. Railroad breakdown Breakdown of Passenger Traffic 2. Some competing railroads actively promote a series of one-day sightseeing tours on into two divisions Division summer weekends. Most often, these tours are timed so that the cars with the tourists are hitched on with regularly scheduled passenger trains. What costs are relevant for making Railroad Freight Passenger Not Division Division Division decisions to run such tours? Other railroads, facing the same general cost structure, refuse to conduct such sightseeing tours. Why? as a whole Traffic Traffic Allocated 2 3. Suppose that the railroad has petitioned government authorities for permission to drop Revenue 80,000,000 70,000,000 10,000,000 division 1. What would be the effect on overall company net income for 20X4, assuming Variable costs 24,000,000 21,000,000 3,000,000 that the figures are accurate and that 20X4 operations are expected to be in all respects a duplication of 20X3 operations? Contribution margin 56,000,000 49,000,000 7,000,000 i More Info Separable discretionary Print Done fixed costs 11,000,000 10,640,000 360,000 10,000 Contribution controllable Total revenue in 20X3 was $80 million, of which $70 million was freight traffic and $10 by segment managers 45,000,000 38,360,000 6,640,000 (10,000) million was passenger traffic. Forty percent of the passenger revenue was generated by division 1, 30% by division 2, and 30% by division 3. Separable committed costs 22,000,000 13,200,000 8,800,000 Total variable costs were $24 million, of which $21 million was caused by freight traffic. Of the $3 million allocable to passenger traffic, $1.53, $1.35, and $0.12 million could be Contribution by segments 23,000,000 25, 160,000 (2,160,000) allocated to divisions 1, 2, and 3, respectively. Unallocated costs 700,000 Total separable discretionary fixed costs were $11 million, of which $10.64 million applied to freight traffic. For the remaining $360,000 applicable to passenger traffic, $10,000 Income before taxes 22,300,000 could not be allocated to specific divisions, while $230,000, $90,000, and $30,000, were allocable to divisions 1, 2, and 3, respectively. Total separable committed costs, which were not regarded as being controllable by Enter any number in the edit fields and then click Check Answer. segment managers, were $22 million, of which 60% was allocable to freight traffic. Of the 40% traceable to passenger traffic, divisions 1, 2, and 3 should be allocated $4 million, $850,000, ? parts and $100,000, respectively; the balance was unallocable to a specific division. 3 remaining The common fixed costs not clearly allocable to any part of the company amounted to $700.000. Check
