Question
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
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 Employees Revenues
101$ 4,214 39$ 4100
102 2894 29 2227
103 5181 47 5738
104 3998 38 3982
105 3676 33 2914
106 3319 38 4023
107 5029 54 6894
108 2374 26 1779
109 4688 44 5416
110 2959 35 3228
111 4179 37 3886
112 3200 41 4690
113 2556 35 3552
114 4655 42 4817
115 2986 28 2124
Use the high-low method to estimate the fixed and variable portions of store costs based on employees.(Do not round your intermediate calculation. Negative amounts should be indicated by a minus sign. Round your answer to the nearest whole number (in thousands of dollars).)
What is the Variable cost (per employee) $
What is Fixed cost $
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