Liza Dait

is examining customer-service costs in the southern region of

Cabot

Products.

Cabot

Products has more than 200 separate electrical products that are sold with a 6-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows:

LOADING...

(Click

the icon to view the data.)

Read the requirements.

LOADING...

Question content area bottom

Part 1

Requirement 1. Plot the relationship between customer-service costs and number of service reports. Is the relationship economically plausible?

Begin by

plotting the relationship

between the customer-service costs and the number of service reports. (Enlarge the graph to maximum size and use the point tool button displayed to draw the graph.)

050100150200250300350400450500$10,000$23,000Number of service reportsCustomer-service department costs

interactive graphClick to enlarge graph

Part 2

The relationship between customer-service costs and the number of service reports

is

is not

economically plausible.

Part 3

Requirement 2. Use the high-low method to compute the cost function, relating customer-service costs to the number of service reports.

=

+

Part 4

Requirement 3. What variables, in addition to number of service reports, might be cost drivers of weekly customer-service costs of

Cabot

Products?

Select two variables that might be cost drivers of weekly customer-service costs of

Cabot

Products.