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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. During a discussion, one of the managers suggests that number of employees might be better at explaining cost than store revenues. As a result of that suggestion, managers collected the following information from last year's operations (revenues and costs in thousands of dollars): Store Costs 101 $5,740 Employees 51 Revenues $2,724 102 3,565 49 5,096 103 5,600 51 5,183 104 4,327 35 2,240 105 3,689 38 5,519 106 2,777 26 2,846 107 2,821 35 3,349 108 2,318 37 6,340 109 2,124 24 3,646 110 3,090 29 2,833 4 111 2,329 28 4,732 112 5,973 56 6,716 113 5,257 53 4,407 114 3,220 53 5,192 115 5,411 50 3,606 Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on employees. (Do not round your intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. Enter your answers in thousands of dollars.) Answer is complete but not entirely correct. Variable cost (per employee) $ 130 14 C
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