During autumn months, passenger railroads across the globe deal with a condition called slippery rail. It results from a combination of water, leaf oil, and pressure from the train's weight, which creates a slippery black ooze that prevents trains from gaining traction.

a. One solution for slippery rail is to cut back trees from all of a rail firm's rail network on a regular basis, thereby helping to prevent the problem from developing. If incurred, would this railroad expense be a better example of a fixed cost or a variable cost? Why?

b. Another way of addressing slippery rail is to wait until it begins to develop. Then the company purchases sand and dumps it on the slippery tracks so that trains already enroute within the rail network can proceed. If incurred, would this railroad expense be a better example of a fixed cost or a variable cost? Why?

Step by step solution

01

Given Information (part a).

The slippery rail is to cut back trees from all of a rail firm's rail network on a regular content. It help to prevent the problem from developing

To find the slippery rail expenses is a fixed cost or variable cost.

02

Explanation of railroad expense (part a).

The expense of cutting trees would've been regarded as fixed costs evaluating that it is not related with the rail service provided. The impact of fixed costs on future output expansion is negligible.

As a result, the cost of cutting trees to prevent problems with the rail track is considered a fixed cost.

03

Given Information (part b).

To find the railroad expenses is a fixed cost or variable cost.

04

Explanation of Railroad expenses (part b).

The expense of cutting trees would've been regarded as fixed costs evaluating that it is not related with the rail service provided. The impact of fixed costs on future output expansion is negligible.

As a result, the cost of cutting trees to prevent problems with the rail track is considered a fixed cost.

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