The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,000,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: $\begin{array}{lr}
\text { Total Miles Traveled: }\\
\text { Western Division } & 800,000 \mathrm{miles} \
\text { Pacific Division } & 1,200,000 \mathrm{miles}
\end{array}$

The amount of track improvement cost that should be allocated to the Western Division is:
A) $4,000,000.
B) $3,200,000.
C) $800,000.
D) $5,333,333.

Question

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,000,000 to maintain its railroad track. Pertinent data for the two divisions are as follows: $\begin{array}{lr}
\text { Total Miles Traveled: }\\
\text { Western Division } & 800,000 \mathrm{miles} \
\text { Pacific Division } & 1,200,000 \mathrm{miles}
\end{array}$

The amount of track improvement cost that should be allocated to the Western Division is:
A) $4,000,000.
B) $3,200,000.
C) $800,000.
D) $5,333,333.

Quizplus · Accepted Answer

The cost should be allocated based on the proportion of miles traveled. The Western Division traveled 800,000 miles out of a total of 2,000,000 miles (800,000 + 1,200,000). Therefore, the allocation is $ \frac{800,000}{2,000,000} \times 8,000,000 = 3,200,000 $.

The Western and Pacific Railroad Has Two Divisions, the Western