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	$	1,231,000		All variable
Supervision		203,000		$	141,000	Fixed
Truck expense		1,270,000		$	178,000	Fixed
Building leases		865,000		$	548,000	Fixed
Utilities		200,000		$	115,000	Fixed
Warehouse labor		845,000		$	139,000	Fixed
Equipment leases		777,000		$	582,000	Fixed
Data processing equipment		955,000		All fixed
Other		838,000		$	386,000	Fixed
Total	$	7,184,000

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	229,000	115	$5,699,161
2	324,000	123	5,806,660
3	230,000	121	5,849,927
4	384,000	132	5,927,639
5	308,000	112	5,939,157
6	361,000	132	6,043,386
7	361,000	123	5,918,517
8	455,000	127	6,133,890
9	359,000	131	6,126,152
10	432,000	132	6,186,647
11	376,000	136	6,208,821
12	456,000	140	6,362,277

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

rev: 11_25_2017_QC_CS-108812

5.

value: 1.66 points

Required information

Required:

a-1. Determine the variable cost per case assuming that 450,000 cases will be shipped next month based on the controller's analysis of accounts. (Round your answer to 2 decimal places.)

a-2. Prepare an estimate of operating costs.