Question

Costco has recently started to take the customer orders over the web site. Following is the past data for first six month:

Month	Customer Web site costs	Number of Web site hits
January	$8,960	11,600
February	$8,762	11,270
March	$9,032	11,720
April	$8,942	11,570
May	$8,420	10,700
June	$8,492	10,820

Required:

1. Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs.
2. Determine the cost equation to estimate the customer Web site expenses for Costco Online.
3. If Costco expects 9,500 Web site hits for July, what are their anticipated costs for July?

Answer 1