Caiman Distribution Partners is the Brazilian distribution company of a U.S. consumer products firm. Inflation in Brazil has made bidding and budgeting difficult for marketing managers trying to penetrate some of the country's rural regions. The company expects to distribute 450,000 cases of products in Brazil next month. The controller has classified operating costs (excluding costs of the distributed product) as follows.

Account	Operating Cost			Behavior
Supplies	$	382,000		All variable
Supervision		208,000		$	130,000	Fixed
Truck expense		1,280,000		$	189,000	Fixed
Building leases		870,000		$	534,000	Fixed
Utilities		224,000		$	115,000	Fixed
Warehouse labor		852,000		$	124,000	Fixed
Equipment leases		762,000		$	607,000	Fixed
Data processing equipment		931,000		All fixed
Other		859,000		$	408,000	Fixed
Total	$	6,368,000

Although overhead costs were related to revenues throughout the company, the experience in Brazil suggested to the managers that they should incorporate information from a published index of Brazilian prices in the distribution sector to forecast overhead in a manner more likely to capture the economics of the business.

Following instructions from the corporate offices, the controller's office in Brazil collected the following information for monthly operations from last year.

Month	Cases	Price Index	Operating Costs
1	310,000	122	$5,699,143
2	358,000	114	5,806,642
3	343,000	120	5,849,909
4	373,000	121	5,927,621
5	360,000	128	5,939,139
6	378,000	115	6,043,368
7	381,000	128	5,918,499
8	419,000	129	6,133,872
9	362,000	131	6,126,134
10	425,000	141	6,186,629
11	403,000	135	6,208,803
12	426,000	135	6,362,259

These data are considered representative for both past and future operations in Brazil.

rev: 10_16_2019_QC_CS-186472, 10_13_2020_QC_CS-234647, 10_13_2020_QC_CS-234650

b. Use the high-low method to compute an estimate of operating costs assuming that 450,000 cases will be shipped next month

c-1. Using Excel, calculate the simple regression of operating costs on cases shipped and enter the regression coefficients.

c-2. Compute the estimation of operating costs assuming that 450,000 cases will be shipped next month by using the results of a simple regression of operating costs on cases shipped

d-1. Enter the regression coefficients.

d-2. Compute the estimation of operating costs assuming that 450,000 cases will be shipped next month by using the results of a multiple regression of operating costs on cases shipped and the price level. Assume a price level of 141 for next month

e. Select the most appropriate estimate for the given circumstances.