Question Completion Status: Path:p QUESTION 21 Randal Jaxx is considering opening a Fast 'n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2.00 per quart. He estimates that each oil change will require 5 quarts of oil. Oil filters will cost $3.00 each. He must also pay The Fast 'n Clean Corporation a franchise fee of $1.10 per oil change, since he will operate the business as a franchise. Randal Jaxx anticipates that he can provide the oil change service with a filter at a price of $25 each. Currently, R. Jaxx is focusing on the utility costs of the Car Service Center. Utility costs are expected to behave in relation to the number of oil changes as follows: ESTIMATED ESTIMATED Estimate # Number of Oil Changes Utility Costs 1. 4,000 $ 6,000 2. 6,000 $ 7,300 3. 9,000 $ 9,600 4. 12,000 $12,600 14,000 $15,000 5. 17 points Instructions: Must show ALL COMPUTATIONS. (a) Using the high-low method, determine the (1) variable utility cost element and (2) fixed utility cost element. (b) Test the accuracy of your answers in (a) for each of the estimated number of oil changes, (1) through (5). Comment on your model. Is the model below the estimate or above? 17 points (c) i. What is 1 advantage and 1 disadvantage of the High-Low Method? 9 points ii. Is there an alternative method that will provide better results than high-low? Discuss. 9 points Arial 7 3 (12pt) V - E - T TT TT Paragraph % DOO O fx Mashups 10 T T, E'S 1 HTML 055