The Yin-Yang Yogurt Shoppe serves the best chocolate-vanilla frozen yogurt in the city. While Yin-Yangs management tracks

The Yin-Yang Yogurt Shoppe serves the best chocolate-vanilla frozen yogurt in the city. While Yin-Yang’s management tracks the cups of yogurt sold and total costs incurred each month, they are woefully unaware of which costs do and do not vary with the cups of yogurt sold (i.e., which costs are fixed and which costs are variable). Yin-Yang’s management is hoping that you can figure out their cost structure. To this end, they have provided you with the following data for the past 12 months of operations:

Required:
a. Plot (i.e., graph) the relation between Yin-Yang’s monthly total costs (y-axis) and cups of yogurt sold (x-axis).
b. Estimate Yin-Yang’s monthly total cost equation using the data from January and February (i.e., use the data from January and February to estimate Yin-Yang’s monthly fixed costs and variable cost per cup of yogurt sold).
c. Estimate Yin-Yang’s monthly total cost equation using the two observations associated with the highest and lowest total monthly cost levels.
d. Estimate Yin-Yang’s monthly total cost equation using the two observations associated with the highest and lowest total monthly activity levels (i.e., use the high-low method).
e. Estimate Yin-Yang’s cost structure using regression analysis. Perform the analysis with and without the data for December.
f. Comment on the results. Specifically, which cost estimate do you believe is best? Why do you believe the estimate you chose leads to a better specification of Yin-Yang’s monthly total costs than the other twoestimates?

Transcribed Image Text:

Month Cups of Yogut Sold Total Costs anuary February March ul September October November Decemher