The Western and Pacific Railroad Has Two Divisions, the Western $\begin{array}{lr}\text { Western Division } & 860,000 \mathrm{miles} \\\text { Pacific Division } & 1,260,000 \mathrm{miles}\end{array}$

question 70

Multiple Choice

The Western and Pacific Railroad has two divisions, the Western Division and the Pacific Division. The company recently invested $8,600,000 to maintain its railroad track. Pertinent data for the two divisions are as follows:Total Miles Traveled: $\begin{array}{lr}\text { Western Division } & 860,000 \mathrm{miles} \\\text { Pacific Division } & 1,260,000 \mathrm{miles}\end{array}$
The amount of track improvement cost that should be allocated to the Western Division is: (Round intermediate calculation to 2 decimal places.)

• A) $5,819,333.
• B) $3,491,600.
• C) $4,300,000.
• D) $860,000.

---

Definitions:

Ordering Cost

Expenses associated with placing and receiving orders for goods or supplies, including administrative and staffing costs.

Holding Cost

The expenses associated with storing inventory that is not yet sold or utilized, including storage, insurance, and obsolescence costs.

Annual Demand

The total quantity of a product or service that is demanded over the course of a year.

Salvage Value

The estimated resale value of an asset at the end of its useful life.