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 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 Revenues $4,230 2,357 5,933 4,242 3,109 4,283 7,024 1,974 6,066 3,618 4,146 5,015 3,682 5,337 2,774 Costs $4,409 3,154 5,376 4,323 4,066 3,774 5, 224 3,024 5,208 3,349 4,504 3,460 2,946 4,915 3,181 Exercise 5-42 (Algo) Methods of Estimating Costs: High-Low (LO 5-4) 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 $3.8 million. What are the estimated monthly overhead costs, assuming no inflation? c. Managers are also considering a "mega-store" with revenues of $23 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 Exercise 5-42 (Algo) Methods of Estimating Costs: High-Low (LO 5-4) 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 $3.8 million. What are the estimated monthly overhead costs, assuming no inflation? c. Managers are also considering a mega-store with revenues of $23 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 Managers estimate that one of the proposed stores will have revenues of $3.8 million. What are the estimated monthly overhead costs, assuming no inflation? (Do not round variable cost percentage for your calculations. Round your intermediate calculations to the nearest whole dollar. Enter your answer in thousands of dollars.) Store costs Required A Required C > 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 $3.8 million. What are the estimated monthly overhead costs, assuming no inflation? c. Managers are also considering a mega-store with revenues of $23 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 Managers are also considering a "mega-store" with revenues of $23 million. What are the estimated monthly overhead costs, assuming no inflation? (Do not round variable cost percentage for your calculations. Round your intermediate calculations to the nearest whole dollar. Enter your answer in thousands of dollars.) Store costs
