Waveney DIY Centers $($WDC$)$ operates a few dozen stores in the eastern United States. The stores are popular with home

remodelers, contractors, and do$-$it$-$yourself customers. The managers at Waveney are interested in understanding what

drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast

Region is interested in new data analysis approaches to management and offered to run a test using data from the $14$

stores in the region.

The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store

costs: store area $($square footage$)$ and revenue. The following data were collected from the most recent year of operations

$($revenues and costs in thousands of dollars$).$

Exercise $5-44($Algo$)$ Methods of Estimating Costs: High$-$Low $($LO $5-1,2)$

Required:

a$.$ Use the high$-$low method to estimate the fixed and variable portions of store costs based on store revenues.

b$.$ The managers in the region are interested in opening a new store with expected revenues of $$20\mathrm{.}0$ million. Assuming the data and

cost estimates from the current stores are appropriate for the new store $($SE$-15),$ what are the estimated store costs for store SE$-15?$

c$.$ Managers are also considering a "mega$-$store" with revenues of $$32\mathrm{.}0$ million. What are the estimated store costs for the mega

store?

Answer is complete but not entirely correct.

Complete this question by entering your answers in the tabs below.

Managers are also considering a "mega$-$store" with revenues of $$32\mathrm{.}0$ million. What are the estimated store costs for the

mega store?

Note: Do not round your intermediate calculations. Enter your answer in thousands of dollars rounded to $2$ decimal places.