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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 and

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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 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 Employees 101 102 Conts $3,380 4,921 1,995 1,836 2,900 103 104 105 106 107 108 109 110 Revenues $3,637 2.801 4,774 4,600 6,071 4,396 5, 173 6,507 4.866 3,264 5,734 3,238 5.039 4.630 2,976 111 5.973 1.680 4.738 3,364 2,355 4,799 5, 478 5,715 3,009 112 113 114 115 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 amount should be indicated by a minus sign. Round your answers to 2 decimal places. Enter your answer in thousands of dollars.) Variable cost (per employee) Fixed cost 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 Employees 101 102 103 104 105 106 107 108 109 110 111 112 Revenues $3,637 2,801 4.774 4.600 6.071 4.396 5.173 6,507 4.866 3,264 5.734 3,239 5.039 4.430 2.976 Costs $3,380 4.921 1.995 1,836 2,900 6,334 5,973 1,680 4,738 3,344 2.355 4,799 5.478 5,715 3.009 114 b. Use the results of your high-low analysis to estimate the cost for a store with 37 employees. (Round your intermediate calculations to 2 decimal places. Enter your answer in thousands of dollars.) Store cost

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