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.

A portion of Leslie’s operating information for the company’s last year follows:

	Number of	Operating
Month	Jerseys Printed	Cost
January	200	$5,785
February	220	5,865
March	535	8,635
April	675	9,725
May	630	9,275
June	430	6,245
July	340	6,170
August	250	5,940
September	175	4,880
October	320	6,050
November	260	5,980
December	195	4,930

Required:
3. Using the high-low method, calculate the store’s total fixed operating costs and variable operating cost per jersey.

Fixed cost -

Variable cost per jersey -
4. Using the high-low method results, calculate the store’s expected operating cost if it printed 475 jerseys.

Total Cost -
5. Perform a least-squares regression analysis on Leslie’s data.

Intercept -

X Variable 1 -
6. Using the regression output, create a linear equation (y = a + bx) for estimating Leslie’s operating costs.

Total cost = ________+ _____ Total number of jerseys
7. Using the least-squares regression results, calculate the store’s expected operating cost if it prints 635 jerseys.

Total cost -

Answer 1

	Number of month	Jerseys printed(X)	Cost (Y)	x^2	XY
	January	200	$5,785	$40,000	$1,157,000
	February	220	$5,865	$48,400	$1,290,300
	March	535	$8,635	$286,225	$4,619,725
	April	675	$9,725	$455,625	$6,564,375
	May	630	$9,275	$396,900	$5,843,250
	June	430	$6,245	$184,900	$2,685,350
	July	340	$6,170	$115,600	$2,097,800
	August	250	$5,940	$62,500	$1,485,000
	September	175	$4,880	$30,625	$854,000
	October	320	$6,050	$102,400	$1,936,000
	November	260	$5,980	$67,600	$1,554,800
	December	195	$4,930	$38,025	$961,350
		4230	$79,480	$1,828,800	$31,048,950
	Highest level of activity	675	$9,725
	Lowest level of activity	175	$4,880
	Difference	500	$4,845
3.	Variable cost per jersey	$9.69	(4845/500)
	Fixed cost	$3,184.25	(9725-675*9.69)
4.	Total cost of printing 475 Jerseys	$7,787	(3184.25+475*9.69)
5.	Variable cost per unit	(12*31048950)-(4230*79480)/(12*1828800-4230^2)
	Variable cost per unit =	$8.98
	Total fixed Cost	(79480-8.98*4230)/12
		3458.43
	Equation =	y = 3458.43 + 8.98x
	Intercept = 8.98
6.	Total cost = 3458.43 + 8.98* Total No. of Jerseys
7.	Cost of printing 635 jerseys =	3458.43 + 8.98* 635
	Cost of printing 635 jerseys =	$9,160.73