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1.1 Cost Behaviour - Markham Theatre Company is interested in estimating fixed and variable costs. The following data are available: Table A Month Costs Number

1.1 Cost Behaviour -

Markham Theatre Company is interested in estimating fixed and variable costs. The following data are available:

Table A

Month

Costs

Number of Tickets Sold

January

$160,000

19,000

February

$190,000

22,000

March

$215,000

28,000

April

$217,000

29,000

May

$209,500

29,500

June

$194,500

24,500

July

$240,000

35,000

August

$172,000

20,000

September

$185,000

22,000

October

$202,000

26,000

November

$191,500

23,500

December

$207,000

30,000

  1. Using the high-low method of cost estimation:

  1. what is the variable cost per ticket sold?
  2. what is the fixed portion ($) of the theatre costs?

  1. Using the high-low method of cost estimation, express the total costs (fixed costs per month and variable costs per ticket) in equation form.

  1. Markham Theatre is considering an advertising campaign that is expected to increase annual sales by 15,000 tickets. Assume that the ticket selling price is $25. Ignoring the cost of the advertising campaign, which has not been provided, what is the expected increase in profits associated with the advertising campaign?

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