Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company's stores are listed below for the past six months. Month January February March April May June Total Hours of Operation 500 600 700 450 400 350 Total Utility Cost $ 2,820 3,200 3,600 2,700 2,350 2,200 Required: 1-a. Use the high-low method to estimate the cost behavior for the store's utility costs. Express the cost behavior in formula form (Y = a + bx).
Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company's stores are listed below for the past six months. Month January February March April May June Total Hours of Operation 500 600 700 450 400 350 Total Utility Cost $ 2,820 3,200 3,600 2,700 2,350 2,200 Required: 1-a. Use the high-low method to estimate the cost behavior for the store's utility costs. Express the cost behavior in formula form (Y = a + bx).
Chapter1: Financial Statements And Business Decisions
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Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from
month to month as the tourist trade in the community varies. The utility costs for one of the company's stores are listed
below for the past six months.
Month
January
February
March
April
May
June
Total Hours of Total Utility
Operation
500
600
700
450
400
350
Cost
$2,820
3,200
3,600
2,700
2,350
2,200
Required:
1-a. Use the high-low method to estimate the cost behavior for the store's utility costs. Express the cost behavior in formula form (Y=a
+ bx).
1-b. What is the variable utility cost per hour of operation?
3-a. Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the cost behavior
for the store's utility cost. Express the cost behavior in formula form.
3-b. What is the variable utility cost per hour of operation?
4. During July, the store will be open 300 hours. Predict the store's total utility cost for July using each of the cost-estimation methods
employed in requirements (1) and (3).
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