Estimating a cost function, high-low method. Laurie Daley is examining customer service costs in the Southern Region of Capitol Products. Capitol Products has over 200 separate electrical products that are sold with a six-month guarantee offull repair or replacement with a new product. When a product is returned by a customer, a service report is made. This serv¬

ice report includes details ofthe problem and the time and cost ofresolving the problem.

Weekly data for the most recent ten-week period are Customer Service Number of Week Department Costs Service Reports 1 $16,614 201 2 24,750 276 3 15,530 122 4 22,142 386 5 17,810 274 6 26,268 436 7 20,198 321 8 25,715 328 9 21,920 243 10 20,198 161 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 ofservice reports.

3. What variables, in addition to number ofservice reports, might be cost drivers ofmonthly customer service costs of Capitol Products?