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).

Store	Revenues ($000)	Area (Square Feet)	Costs ($000)
SE-01	$ 20,545	69,147	$ 15,799
SE-02	15,482	51,417	12,495
SE-03	25,721	83,331	19,210
SE-04	19,389	61,374	15,079
SE-05	19,666	58,509	15,112
SE-06	17,756	67,374	14,099
SE-07	24,505	95,748	18,691
SE-08	12,701	46,098	10,747
SE-09	23,081	78,012	17,453
SE-10	15,830	62,055	12,864
SE-11	20,358	65,601	15,633
SE-12	17,120	72,693	13,797
SE-13	13,674	62,055	11,570
SE-14	22,904	74,466	17,294

Required:

1. Use the high-low method to estimate the fixed and variable portions of store costs based on store area.
2. 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?
3. 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?