Question

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,900,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: Western Division 890,000 miles Pacific Division 1,520,000 miles The amount of track improvement cost that should be allocated to the Western Division is: (Round intermediate calculation to 1 decimal place.)

Answer 1

Answer:

$3,286,722

Explanation:

Allocate the improvement cost on the basis of miles traveled by the respective divisions.

Western Division

improvement cost = (890,000 / (890,000+1,520,000)) × $8,900,000

                              = 890,000 / 2,410,000 × $8,900,000

                              = $3,286,722