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. 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 101 102 103 104 105 106 107 108 109 110 Revenues $5,393 4,689 2,793 6,192 5,649 5,147 5,923 4,025 2,639 4,599 4,897 2.412 3,820 2,317 2,926 Employees 24 41 26 54 $1,700 3,709 3,219 5,089 4.393 2.782 1,825 4,760 6,075 4,364 3,869 6,318 2,380 4,583 2,754 26 34 45 47 29 42 58 28 36 26 112 113 114 115 4. Required information 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 Required Information 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 101 102 103 104 105 106 107 108 109 Costs $1,700 3,709 3,219 5,089 4,393 2,782 1.825 4,760 6,075 Employees Revenues $5,393 4,689 2,793 6.192 5,649 5,147 5.923 4,025 2,639 24 26 54 26 47 112 113 114 115 4,897 2.412 3.820 2.317 2.926 3,869 6,318 2,380 4,583 2.754 42 58 28 36 26 5. Required information b. Use the results of your high-low analysis to estimate the cost for a store with 42 employees. (Round your intermediate calculations to 2 decimal places. Enter your answer in thousands of dollars.) tore cost Required Information [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. 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 101 102 103 104 105 106 107 108 Revenues $5,393 4,689 2,793 6,192 5,649 5,147 5,923 4,025 Costs $1,700 3,709 3,219 5,089 4,393 2,782 1,825 4,760 Employees 24 26 54 26 34
