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Alice, owner of a food and beverage outlet, started food delivery last year. She is interested in predicting the cost of delivering food but is
Alice, owner of a food and beverage outlet, started food delivery last year. She is interested in predicting the cost of delivering food but is unsure of the best way to estimate the delivery cost. The following data were collected for the first six months. (a) Use the high-low method to determine the cost function with number of deliveries as the cost driver. (4 marks) (b) Use the high-low method to determine the cost function with number of direct labour hours as the cost driver. (4 marks) (c) For July, there were 250 deliveries and 3,200 direct labour hours and the delivery cost totalled $7,250. Explain which cost driver was the better predictor for July
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