Several studies have shown that cost drivers other than volume affect total costs.* These studies indicate that the greater the variety of products carried by a company, the higher the company’s costs, all things being equal. However, greater variety of products can also increase revenue. Some of the reasons are that customers prefer one-stop shopping and are more likely to make impulse purchases if there are more products from which to choose. The question is whether the additional revenues from maintaining a broad product line justify the additional costs. That is, would a company have greater profits with a narrower product line implying lower costs and lower revenues?Or would it be better off with a broader prgduct line implying higher costs and higher revenues?

1. After doing the multiple regression analysis, what additional information did Leah Cohen require to estimate costs using account analysis?

2. Based on information from the cost estimates and considering C.C. Catering’s new strategy, will the company be successful in the future?