McCartney Services has a customer Web site to take orders, answer customer questions, and address customer complaints. The costs associated with this customer Web site over the past six months are listed below:
Management at McCartney Services believes that the customer Web site costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of Web site hits in any given month as the cost driver.
Required:
1. Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs associated with the customer Web site.
2. Use the results you computed in Requirement 1 to write the cost equation to estimate the customer Web site expenses for McCartney Services.
3. If McCartney Services expects 9,500 Web site hits for July, what are their anticipated customer Web site costs for July?

Question

McCartney Services has a customer Web site to take orders, answer customer questions, and address customer complaints. The costs associated with this customer Web site over the past six months are listed below:
  Management at McCartney Services believes that the customer Web site costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of Web site hits in any given month as the cost driver.
Required:
1. Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs associated with the customer Web site.
2. Use the results you computed in Requirement 1 to write the cost equation to estimate the customer Web site expenses for McCartney Services.
3. If McCartney Services expects 9,500 Web site hits for July, what are their anticipated customer Web site costs for July?

Quizplus · Accepted Answer

The Answer of McCartney Services has a customer Web site to take orders, answer customer questions, and address customer complaints. The costs associated with this customer Web site over the past six months are listed below:
  Management at McCartney Services believes that the customer Web site costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of Web site hits in any given month as the cost driver.
Required:
1. Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs associated with the customer Web site.
2. Use the results you computed in Requirement 1 to write the cost equation to estimate the customer Web site expenses for McCartney Services.
3. If McCartney Services expects 9,500 Web site hits for July, what are their anticipated customer Web site costs for July?

McCartney Services Has a Customer Web Site to Take Orders