Northern Rail is a small railway that recently began running a route between a large mine in Norther Ontario and Minnesota in the United States. Each trip costs $10,000 in fuel, regardless of the number of cars being pulled. A typical train hauls minerals from the mine, freight and passengers. There is also a dining car. The government requires Northern to run passenger service and dining car. A local indigenous group has agreed to subsidize any passenger rail losses. Assume you are an auditor for the indigenous group and are assessing the information provided by Northern Rail for a typical trip:

Mining carsFreight CarsPassenger carsDining carTotalNumber of cars 80 cars9 cars10 cars1 car100 carsRevenue per trip $34,000$4,000$1,000$1,000$40,000Portion of Fuel Cost (note 1) $8,000$900$1,000$100$10,000Other Direct Costs (note 2)$10,000$700$500$800$12,000Net Segment Income $16,000$2,400$(500)$100$18,000

Note 1: Fuel costs are allocated using Activity Based Costing based on the number of cars. Each car requires the same level of effort to pull.

Note 2: other direct costs specific to each kind of car including loading of mining materials, freight and ticketing.

Required: What concerns do you have about the segmented income statement? If there is a better way to calculate the shared costs, then show your calculations and redo the segmented income statement.