Refer to the data in Exercise 3-2 for the Cool-It Company.

Required:
1. Using the high- low method, estimate the fixed shipping expenses per month and the variable cost of shipping each unit.
2. Express the fixed and variable components of total monthly shipping expenses as a cost formula.
3. If Cool-It Company expects to ship 20 units next month, would you feel comfortable using the cost formula from part 2 to estimate total shipping expenses? Why or why not?

Data from in Exercise 3-2.

Cool-It Company is a wholesaler of custom-built air conditioning units for commercial buildings. The data below show the number of units shipped and the total shipping expenses for the past eight months.

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Month January February March April May June July August Number of Units Shipped 3 6 188LSIC 5 7 8 2 Total Shipping Expenses $3,600 $4,600 $3,400 $4,000 $4,600 $5,400 $2,400 $1,200