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

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).
Required:
a. Use the high-low method to estimate the fixed and variable portions of store costs based on store area.
b. The managers in the region are interested in opening a new store with expected area of 50,000 square feet.
Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-16), what are the
estimated store costs for store SE-16?
c. Managers are also considering a concept store focused on downtown home and condo owners. These stores would
have a much smaller area and carry a narrower range of products. The managers envision such stores being an
average of 35,000 square feet. What are the estimated store costs for the average concept store?
Complete this question by entering your answers in the tabs below.
\table[[Required,Required,Required],[A,B,C]]
Use the high-low method to estimate the fixed and variable portions of store costs based
on store area.
Note: Round variable cost answer to 2 decimal places. Enter Fixed cost answer in
thousands of dollars rounded to 2 decimal places.
Please answer a,b, and c. A says STORE COSTS BASED ON STORE AREA
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