ORCO, a cooperative of organic family-owned farms outside of Madison, Wisconsin, has recently started a fresh produce club to provide support to the groups member farms and to promote the benefits of eating organic, locally produced food to the nearby suburban community. Families pay a seasonal membership fee of $29and place their orders a week in advance for a price of $49per order. In turn,ORCOdelivers fresh-picked seasonal local produce toseveral neighbourhood distribution points.600families joined the club for the first season, but thenumber of orders varied from week to week. Daniel Craig has run the produce club for the first 10-week season. Before becoming a farmer, Daniel had been a business major in college, and he remembers a few things about cost analysis. In planning for next year, he wants to know how many orders will be needed each week for the club to break even, but firsthe must estimate the clubs fixed and variable costs. He has collected the following data over the clubs first10 weeks of operation:

Week	Number of orders per week	Total weekly costs
1	353	19005
2	380	19500
3	424	22400
4	475	23404
5	445	22671
6	495	23656
7	330	18000
8	490	23712
9	545	25010
10	520	25100

Please answer the following questions:(next page)

REQUIRED:

1.Plot the relationship between number of orders per week and weekly total costson a graph.(0.5 marks) 2.Estimate the cost equation using the high-low method, and draw the cost curveon your graph.(1 mark) 3.Danielusesleast squareregressiononhis computer to calculate the followingcost function: Total weekly costs=$6981+($34.25*Number of weekly orders) Draw the regression line on your graph.(0.5 marks)

4.Istheleast squareregression line plausible(makes sense)? Explain.(0.5marks)

5. Whichcostfunction(estimatedbythe high-low method,orestimatedusing theleast squareregression method) is better? Explainwhybriefly.(0.5 marks) 6.DidORCObreak even this season? Remember that each of the families paid a seasonal membership fee.(1mark) 7.Assume that next yearno membership fee is chargedand thatotherwise theprices and costs do not change. How manyorders, on average, mustORCOreceive eachweekto break even?Assume that the season is again 10 weeks long.(1 mark)

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