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 Supplies Supervision Truck expense Building leases Utilities Warehouse labor Equipment leases Data processing equipment Other Total Operating Cost $1,582,000 201,000 1,380,000 872,000 210,000 Behavior All variable $155,000 Fixed $178,000 Fixed $542,000 Fixed $106,000 Fixed $147,000 Fixed $611,000 Fixed All fixed $345,000 Fixed 10 838,000 756,000 962,000 835,000 $7,636,000 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 1 247,000 114 $5,699,171 2 352,000 109 5,806,670 3 248,000 127 5,849,937 4 421,000 128 5,927,649 5 347,000 114 5,939,167 6 371,000 131 6,043,396 7 441,000 127 5,918,527 8 469,000 143 6,133,900 9 330,000 134 6,126,162 10 403,000 140 6,186,657 11 409,000 133 6,208,831 12 470,000 145 6,362,287 These data are considered representative for both past and future operations in Brazil.