The management of Eastern Railroad Company introduced in Exercise 5-20 improved the profitability of the Atlanta/Baltimore route in June by reducing the price of a railcar from $512 to $464. This price reduction increased the demand for rail services. Thus, the number of railcars increased by 256 railcars to a total of 640 railcars. This was accomplished by increasing the size of each train but not the number of trains. Thus, the number of train-miles was unchanged. All the activity rates remained unchanged.

a. Prepare a contribution margin report for the Atlanta/Baltimore route for June. Calculate the contribution margin ratio in percentage terms to one decimal place.

b. Prepare a contribution margin analysis to evaluate management’s actions in June. Assume that the June planned quantity, price, and unit cost was the same as May.