Stella Services has a customer website to take orders, answer customer questions, and address customer complaints. The costs associated with this customer website over the past six months are listed below:

Management at Stella Services believes that the customer website costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of website hits in any given month as the cost driver.
Required:
1. Using the high-low method, estimate the variable cost per website hit and the monthly fixed costs associated with the customer website.
2. Write the cost equation for estimating the customer website expenses for Stella Services using the results from Requirement 1.
3. If Stella Services expects 9,500 website hits for July, what are their anticipated customer website costs for July?

Question

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

Quizplus · Accepted Answer

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

Stella Services Has a Customer Website to Take Orders, Answer