A3. Clinton Brown, owner of a florist shop, is interested in predicting the cost of delivering floral arrangements. He collected monthly data on the number of deliveries and the total monthly delivery cost (depreciation on the van, wages of the driver and fuel) for the past year.

a. Using the high-low method and on the basis of the above data, compute the variable rate of delivery cost (consider all decimal points). Calculate the fixed cost at high and low points. Explain the characteristics of variable cost and fixed cost under the high-low method.

b. If there were 900 and 1,100 deliveries in the second and third quarters of the year respectively, what would be the total delivery cost of these quarters.

c. Using a computer-spreadsheet program such as Excel, run a regression on the data in the above table. Print out your summary report (results) from Excel.

d. What is R-square based on your results in (c)? Explain it.

Using the cost formula found in requirement (c), what would predicated delivery cost be for a month with 400 deliveries?

Month Januarye February Marche Aprile Maye June July August September October November December Number of deliveries 100- 5504 854 1152 1604 5904 500- 520- 100- 200- 2604 Delivery cost in $ 1,200- 1,800- 1,100 1,050 1,1902 1,980 1,800- 1,700- 1,100- 1,2752 1,400- 2,200+ 450 t +