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Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores
Davis Stores sells clothing in 15 stores located around the southwestern United States. The managers at Davis are considering expanding by opening new stores and are interested in estimating costs in potential new locations. They believe that costs are driven in large part by store volume measured by revenue. The following data were collected from last year's operations (revenues and costs in thousands of dollars). Store Revenues Costs 101 $4,220 $4,394 102 2,347 3,134 103 5,918 5,361 104 4,222 4,298 105 3,094 4,036 106 4,263 3,739 107 7,014 5,209 108 1,959 2,974 109 6,016 5,168 110 3,588 3,319 111 4,126 4,479 112 4,990 3,440 113 3,672 2,916 114 5,297 4,895 115 2,724 3,166 Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on revenues. b. Managers estimate that one of the proposed stores will have revenues of $3.7 million. What are the estimated monthly overhead costs, assuming no inflation? c. Managers are also considering a "mega-store" with revenues of $22 million. What are the estimated monthly overhead costs, assuming no inflation? Complete this question by entering your answers in the tabs below. Required A Required B Required C Use the high-low method to estimate the fixed and variable portions of store costs based on revenues. (Round variable cost percentage answer to 1 decimal place. Enter fixed cost answer in thousands of dollars.) Variable cost Fixed cost %
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