Question

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $7,100,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: Total Miles Traveled: Western Division 710,000 miles Pacific Division 1,110,000 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

Cost allocated to Western Division= $2,769,780.22

Step-by-step explanation:

The track improvement cost should be fairly allocated to the divisions using the miles traveled as basis.

Total miles traveled = 710,000 + 1,110,000= 1,820,000

Cost allocated to Western division = (710,000/1820,000)× 7,100,000

= $2,769,780.22