To compete with Best Buy’s Geek Squad (GeekSquad.com), Circuit City recently began a similar service named firedog (firedog.com). Firedog offers in-home, in-store, and online services for computer repair, installation and support, and home theater product installation.

Required
1. What are some of the costs that Circuit City had to consider when deciding whether to offer the firedog service? Are those costs different from what Best Buy must consider when offering additional new Geek Squad products or services? Explain.
2. Would variable or absorption costing be more useful to Circuit City in analyzing whether firedog is profitable? Explain.