Rapp Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its seven helicopters makes between 1,300 and 2,300 round-trips per year. The records indicate that a helicopter that has made 1,300 round-trips in the year incurs an average operating cost of $600 per round-trip, and one that has made 2,300 round-trips in the year incurs an average operating cost of $450 per round-trip.

Required

1. Using the high-low method, estimate the linear relationship y = a + bX, where y is the total annual operating cost of a helicopter and X is the number of round-trips it makes to JFK Airport during the year.

2. Give examples of costs that would be included in a and in b.

3. If Rapp Travel expects each helicopter to make, on average, 1,700 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be?

4. What factors might influence the accuracy of the cost prediction in requirement 3?