Please answer question1 4 on the sheet please, on the sheet!

Ann Arbor Railroad Company Abstract: The case uses a semi-fictional railroad company to introduce some of the most relevant topics in managerial accounting in a brief, yet effective, way. The first part delves into where costs come from and how they should be measured and allocated. The second part introduces the idea of using the cost data for decision-making purposes. Specifically, the case explores how to make a special-order decision and a price decision that include non-quantitative factors. The third part introduces the problems that organizations face in designing and using cost measurement systems. Overall, this case is a useful tool to learn how to map resources into services/products, how to build different cost configurations for different purposes, and how to link accounting measurements to the organizational structure. The intuitive setting of the case makes the learning experience pleasant and effective. Keywords: Cost Behavior, Cost Allocation, Decision Making, Control System. Ann Arbor Railroad Company case Ann Arbor Railroad (AAR) is a railroad company that is partly financed by the US Department of Transportation through its high-speed rail stimulus initiative. AAR operates daily train service between Detroit, MI and Chicago, IL. The Company operates two classes of passenger trains: slow-speed and high-speed. AAR built and currently maintains a roadbed and tracks between the two cities as well as stations in both Detroit, MI and Chicago, IL. The tracks and signaling equipment cost approximately $1 million per mile to build and will be depreciated over thirty years. The bulk of the Company's station-related costs arise from the Detroit and Chicago stations. Costs for the intermediate stations, which are only used by the slow-speed trains, are largely paid for by the local municipalities. AAR does not own any trains, but leases them. Specifically, it leases 10 high-speed trains (locomotives plus carriages) from Siemens AG and 10 slow-speed trains (locomotives plus carriages) from GE. Locomotives refer to the motorized entity pulling the carriages. Carriages carry passengers but are unable to move autonomously. The Company is responsible for maintaining the trains. The high-speed trains are technologically advanced and more costly than the slow-speed trains, which are technologically simpler and older. AAR employs the train engineers and the onboard service staff. The Company has contracted with Gourmet Services to provide complimentary food and drinks to high-speed passengers. The contract entails a fixed monthly payment of $700,000 plus $8 per passenger. Slow-speed train passengers receive no complimentary items; they can buy food and beverages from an independent catering company with no profit or loss for AAR. Projected cost and travel volume data appear in Tables 1 and 2. Please refer to these to answer the following questions. The data are only approximate and have been modified to ease computations. Table 1 Ann Arbor Railroad Projected Cost for March 20X0 COST TYPE COST ELEMENTS AMOUNT Head office-related (in Detroit station) Administrative personnel, marketing costs, $500,000 per month IT costs Roadbed, track, and Depreciation of track & signaling signaling equipment-related equipment $1,000,000 per month Interest payments $500,000 per month Maintenance workers $5,000 per month Repair materials $200 per slow-speed trip $400 per high-speed trip Station-related Building costs (temperature control, leasing costs, etc.) and other costs (including cleaning service, ticket, and baggage handling personnel) Detroit: $20,000 per month Chicago: $32,000 per month All other stations combined: $7,000 per month Train-related Leasing costs slow-speed train Leasing costs - high-speed train Hauling costs (power and fuel) $100,000 per month per train $500,000 per month per train $5,000 per slow-speed trip $8,000 per high-speed trip $150,000 per month Engineers and onboard service staff total Onboard services Gourmet services contract $700,000 per month $8 per passenger Table 2 Ann Arbor Railroad Projected Business for March 20X0 VOLUME Slow-Speed High-Speed Trips 200 300 Total Passengers 75,000 100,000 (over all trips) Average Ticket Price $50 $180 Note: Passenger volumes and fares are averaged across trips. Trips and Average Ticket Price both refer to round trips. Case Requirements: 1. What is the total projected cost for March 20X0? (10 points) 2. What is the projected profitability per passenger (revenues minus costs) for the high- speed and slow-speed services for March 20X0? (For this question, assume that common fixed costs are allocated equally (i.e., 50% each) between high-speed and slow-speed services). (20 points) 3. Assume that you are the manager in charge of the high-speed service. On March 20th, MBA students from the Detroit area who are taking an Entrepreneurial Management elective course approach you with the following offer. The students want to reserve 20 seats for a round trip from Detroit to Chicago on March 21st to conduct a market research study for their final project. Specifically, the MBA students have arranged for undergraduates to participate in the study, which is aimed at identifying factors that make train travel more attractive to customers. The MBA students are on a limited budget and propose to pay Ann Arbor Railroad $1,000 for the round trip for the 20 seats. Tickets sales for March 21st have been low, and, as of today, there are still over 100 seats available. Would you accept the students' offer? (20 points) 4. Using the information from table 2, what is the number of tickets that Ann Arbor Railroad must sell to breakeven in each service line? (25 points) 5. Using the information from table 2, what is the volume of sales that Ann Arbor Railroad must generate to breakeven overall? (25 points) Ann Arbor Case Study Question 1 - Total projected cost for March 20X0. Costs S Total Total Projected Cost for March Question 4 - Segments Break-even Slow-speed % High-speed % Total % Revenue Costs: Variable Costs Contribution Margin Direct Fixed Costs Segment Margin Indirect Fixed Costs Operating Income Sales Mix Slow-speed High-speed # Of Tickets Sales # Of Tickets Sales Segments Breakeven