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 Operating Cost $1,048,000 Behavior All variable $166,000 Fixed 220,000 1,210,000 $194,000 Fixed 836,000 $538,000 Fixed 217,000 $113,000 Fixed Warehouse labor 849,000 $123,000 Fixed Equipment leases 761,000 $ 611,000 Fixed Data processing equipment. 949,000 Other Total 869,000 All fixed $395,000 Fixed $6,959,000 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: 1 267,000 105 $5,699,155 2 354,000 108 5,806,654) 3 268,000 118) 5,849,921 4 420,000 123 5,927,633