Exercise 5-42,5-43 and 5-44 (Algo) (LO 5-4,5) [The following information applies to the questions displayed below) 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 ies 105 107 10 1e9 11e 111 112 113 114 115 Revenues 54,110 2,237 5,753 4,602 2,929 4,043 6,904 1,794 Costs $4,229 2,914 5,196 4,023 3,706 3,354 5,14 2,424 4,728 2,989 4,284 3,220 2,56 4,675 3,003 5,466 3,258 3,906 4,715 3,562 2,174 4.85 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 $26 million What are the estimated monthly overhead costs, assuming no Inflation? c. Managers are also considering a megastore with revenues of $11 millon. What are the estimated monthly overhead costs. assuming no Inflation? 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 percentage answer to 1 decimal place. Enter fixed cost answer in thousands of dollars.) Variable cost % Fixed cost Required B > Required A Required B Required Managers estimate that one of the proposed stores will have revenues of $2.6 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 boste Required A Required Complete this question by entering your answers in the tabs below. Required A Required 8 Reduired c Managers are also considering a "mega-store" with revenues of $11 million. What are the estimated monthly overhead costs. assuming no inflation? (Do not round variable cont percentage for your calculations. Round your intermediate calculations to the nearest whole dollar. Enter your answer in thousands of dollars.) Store costs Required: a. Estimate store costs for a store with revenue of $2.6 million b. What percentage of the variation in store costs is explained by the independent variable? Complete this question by entering your answers in the tabs below. Required A Required What percentage of the variation in store costs is explained by the independent variable? (Enter answer as a percentage rounded to 1 decimal place.) Percentage of variation in store cost 96
