Question

Calibri (Body) 12 A AT 4Wrap Text Paste A E E Merge & Center x A B D High-Low Method Exercise Harlan Gravity Grips produces spike sets for track shoes. CEO Brittany Harlan has gathered the following information about the company's sales volume and marketing costs. Sales Volume Total in Units 550,700 Marketing $82,770 January February 390,500 74,525 March 561,000 83,050 543,000 April 82,330 546,600 82,480 May 82,860 552,900 June Required: Use references and formulas for all answers uta the variable.marketing.cost ner spike set. LL D E A G 47 Recalculate the marketing cost function, removing the potential outlier. 48 e. 49 High Cost High Volume 50 Low Cost Variable Cost 51 Low Volume 52 53 54 55 561 57 58 59 per spike set sold 60 f 61 Compute the total fixed marketing cost. 62 Solve 63 High Low 64 Total Cost 65 Variable Cost 66 Fixed Cost 67 68 E Represent the marketing cost function in equation form. (Can be typed) 69 Marketing Cost 70 71 72 h. Which of the two cost functions you calculated would be appropriate to use in estimating future marketing costs? Why? 73 74 75 Answer: 76 7 :78 79 80 82 91 92 1- Regression 2-Regression 3-High-Low

Answer 1

1) Variable cost = (83,050 - 74,525)/(561,000 - 390,500)

=0.05

2)Fixed cost =83,050 - (561,000 x 0.05)

=55,000

3)Marketing cost = 0.05 X + 55,000