High-Low Method for a Service Company Boston Railroad decided to use the high-low method and operating data from the past six months to estimate the fixed and variable components of transportation costs. The activity base used by Boston Railroad is a measure of railroad operating activity, termed "gross-ton miles," which is the total number of tons multiplied by the miles moved. Transportation Costs Gross-Ton Miles January $1,235,600 340,000 February 1,377,600 380,000 March 973,600 246,000 April 1,320,800 368,000 May 1,107,800 296,000 June 1,420,200 400,000 Determine the variable cost per gross-ton mile and the fixed cost. Variable cost (Round to two decimal places.) per gross-ton mile Total fixed cost $ Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales $39,800 Food and packaging $15,540 Payroll 10,000 Occupancy (rent, depreciation, etc.) 7,270 General, selling, and administrative expenses 5,800 $38,610 Income from operations $1,190 Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, selling, and administrative expenses. a. What is Wicker Company's contribution margin? Round to the nearest million. (Give answer in millions of dollars.) $ million b. What is Wicker Company's contribution margin ratio? Round to one decimal place. % c. How much would income from operations increase if same-store sales increased by $2,400 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million Sales Mix and Break-Even Sales Dragon Sports Inc. manufactures and sells two products, baseball bats and baseball gloves. The fixed costs are $948,600, and the sales mix is 30% bats and 70% gloves. The unit selling price and the unit variable cost for each product are as follows: Products Unit Selling Price Unit Variable Cost Bats $80 $60 Gloves 200 120 a. Compute the break-even sales (units) for both products combined. units b. How many units of each product, baseball bats and baseball gloves, would be sold at break-even point? Baseball bats units Baseball gloves units Break-Even Sales and Sales Mix for a Service Company Zero Turbulence Airline provides air transportation services between Los Angeles, California; and Kona, Hawaii. A single Los Angeles to Kona round-trip flight has the following operating statistics : Fuel $11,929 Flight crew salaries 9,137 Airplane depreciation 4,314 Variable cost per passenger-business class 60 50 Variable cost per passenger-economy class Round-trip ticket price-business class 590 Round-trip ticket price-economy class 270 It is assumed that the fuel, crew salaries, and airplane depreciation are fixed, regardless of the number of seats sold for the round-trip flight. If required round the answers to nearest whole number a. Compute the break-even number of seats sold on a single round-trip flight for the overall product, E. Assume that the overall product is 20% business class and 80% economy class seats. Total number of seats at break-even seats b. How many business class and economy class seats would be sold at the break-even point? Business class seats at break-even seats II Economy class seats at break-even seats Margin of Safety a. If Canace Company, with a break-even point at $489,900 of sales, has actual sales of $690,000, what is the margin of safety expressed (1) in dollars and (2) as a percentage of sales? Round the percentage to the nearest whole number. 1. $ 2. % b. If the margin of safety for Canace Company was 40%, fixed costs were $1,874,400, and variable costs were 60% of sales, what was the amount of actual sales (dollars)? (Hint: Determine the break-even in sales dollars first.)
