Leslie Sporting Goods is a locally owned store that specializes in printing team

Question

Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its business comes from orders for various local teams and organizations. While Leslie’s prints everything from bowling team jerseys to fraternity/sorority apparel to special event shirts, summer league baseball and softball team jerseys are the company’s biggest source of revenue.

Using the high-low method, calculate the store’s total fixed operating costs and variable operating cost per jersey. (Round your "Variable Cost" answer to 2 decimal places and "Fixed Cost" answer to the nearest whole number.)

Variable cost per unit 9.79

Fixed Cost $3,063

Using the high-low method results, calculate the store’s expected operating cost if it printed 440 jerseys. (Round your answer to the nearest whole number.)

Perform a least-squares regression analysis on Leslie’s data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 2 decimal places.)

Leslie Sporting Goods is a locally owned store that specializes in printing team jerseys. The majority of its business comes from orders for various local teams and organizations. While Leslie’s prints everything from bowling team jerseys to fraternity/sorority apparel to special event shirts, summer league baseball and softball team jerseys are the company’s biggest source of revenue.

Explanation / Answer

3)

Variable Operating cost per unit = (9720 - 4825) / (680 - 180) = $ 9.79 per unit

Fixed Operating cost = $9720 - 680 * $9.79 = $3062.80

4) Expected Opearting cost for 440 jerseys = $3062.80 + 440 * $9.79 = $7370.40

5)

Y- input is the operating cost and x-input is the number of jerseys. The following are the results of regression analysis performed on excel using the input values as stated above.

6)

Using the above analysis, the regression equation is in the form of y = a + bx (where y = operating cost, x = number of jerseys, a = fixed cost and b = variable operating cost), we get

y = 3425.29 + 8.95x

7) Expected opearating cost for 645 jerseys, = $9198.04

y = 3425.29 + 8.95 * 645 = $9198.04

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