10-20 Account analysis, high-low

Luwak Coffees wants to find an equation to estimate
monthly utility costs. Luwak has been in business for one year and has
collected the following cost data for utilities:

.png”>

Required:
1. Which of the preceding costs is variable? Fixed?
Mixed? Explain.
2. Using the high-low method, determine the cost function
for each cost.
3. Combine the preceding information to get a monthly
utility cost function for Java Joes.
4. Next month, Luwak expects to use 4,400 kilowatt hours of
electricity, make 3,000 minutes of telephone calls, and use 64,000 gallons of
water. Estimate total cost of utilities for the month.

10-23 Estimating a cost function,
high-low method.

Laurie Daley is examining customer-service costs in
the southern region of Capitol Products. Capitol Products has more than 200
separate electrical products that are sold with a 6-month guarantee of full
repair or replacement with a new product. When a product is returned by a
customer, a service report is prepared. This service report includes details of
the problem and the time and cost of resolving the problem. Weekly data for the
most recent 8-week period are as follows:

.png”>

Required:
1. Plot the relationship between customer-service costs
and number of service reports. Is the relationship economically plausible?
2. Use the high-low method to compute the cost function,
relating customer-service costs to the number of service reports.
3. What variables, in addition to number of service
reports, might be cost drivers of weekly customer-service costs of Capitol
Products?
10-20 Account analysis, high-lowLuwak Coffees wants to find an equation to estimate
monthly utility costs. Luwak has been in business for one year and has
collected the following cost data for utilities:.png”>Required:1. Which of the preceding costs is variable? Fixed?
Mixed? Explain.2. Using the high-low method, determine the cost function
for each cost.3. Combine the preceding information to get a monthly
utility cost function for Java Joes.4. Next month, Luwak expects to use 4,400 kilowatt hours of
electricity, make 3,000 minutes of telephone calls, and use 64,000 gallons of
water. Estimate total cost of utilities for the month.10-23 Estimating a cost function,
high-low method.Laurie Daley is examining customer-service costs in
the southern region of Capitol Products. Capitol Products has more than 200
separate electrical products that are sold with a 6-month guarantee of full
repair or replacement with a new product. When a product is returned by a
customer, a service report is prepared. This service report includes details of
the problem and the time and cost of resolving the problem. Weekly data for the
most recent 8-week period are as follows:.png”> Required:1. Plot the relationship between customer-service costs
and number of service reports. Is the relationship economically plausible?2. Use the high-low method to compute the cost function,
relating customer-service costs to the number of service reports.3. What variables, in addition to number of service
reports, might be cost drivers of weekly customer-service costs of Capitol
Products?