An expert is analyzing the cost behavior patterns of the defendant in an antitrust dispute. The expert plans to use the information to prepare a damage estimate. The expert analyzed 30 months of cost and sale data for the Downtown Department Store.

The results of regression-correlation analyses on the store’s six cost categories regressed against sales dollars are as follows:

Required:
Use the cost behavior data presented above to make a point estimate of expected costs and net income for the month of July (assuming sales of $980,000).

a. How would you describe (categorize)
each of the costs?

b. How strong do you feel about you estimations you made in part a?

Transcribed Image Text:

Account Cost of goods sold a value b value r squarec $45,000 46 .88 Store salaries $65,000 .055 .72 Store utilities $26,000 .015 .34 Store maintenance $14,000 .08 .035 Advertising $26,000 .01 .001 Corporate overhead $75,000 025 .045