Chapter 5, Problem 57P

High-Low Method, Scattcrgraph

Cubicle Solutions sells productivity software such as word processors, spreadsheets, and personal information managers. Cubicle prides itself on customer support and maintains a large call center where customers can call in with technical questions about the installation and use of Cubicle products.

Monthly data on the number of support calls and call center costs for the last year have been collected and are shown next (all activities and costs are in thousands):

Required

1. a.      Estimate the monthly fixed costs and the unit variable cost per support call using the high-low estimation method.
2. b.      Draw a scattergraph relating call center costs to the number of support calls.
3. c.       Considering your scattergraph, how much confidence do you have in your estimate from requirement (a)?