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1. 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	$929,600		247,000
February	1,036,400		276,000
March	732,500		179,000
April	993,700		268,000
May	833,400		215,000
June	1,068,500		291,000

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	$___________

2.

Contribution Margin and Contribution Margin Ratio

For a recent year, Wicker Company-owned restaurants had the following sales and expenses (in millions):

Sales	$34,700
Food and packaging	$9,326
Payroll	8,800
Occupancy (rent, depreciation, etc.)	10,534
General, selling, and administrative expenses	5,000
	$33,660
Income from operations	$1,040

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 $2,100 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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