Question
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
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 February $1,090,600 323,000 1,216,000 361,000 March 859,400 234,000 April 1,165,800 350,000 May 977,800 281,000 June 1,253,600 380,000 Determine the variable cost per gross-ton mile and the fixed cost. Variable cost (Round to two decimal places.) Total fixed cost per gross-ton mile Contribution Margin and Contribution Margin Ratio For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions): Sales Food and packaging Payroll $37,000 $12,590 9,300 8,600 General, selling, and administrative expenses 5,400 $35,890 Income from operations $1,110 Occupancy (rent, depreciation, etc.) 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 $2,200 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the closest million. million
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