Question:
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 cost for the past six months.
|
Sales Volume
|
Total Marketing Costs
|
|
January
|
550,700
|
$82,770
|
|
February
|
390,500
|
$74,525
|
|
March
|
561,000
|
$83,050
|
|
April
|
543,000
|
$82,330
|
|
May
|
54-6,600
|
$82,480
|
|
June
|
552,900
|
$82,860
|
Required
1. Using the high-low method, compute the variable marketing cost per spike set.
2. Compute the total fixed marketing cost.
3. Represent the marketing cost function in equation form.
4. Examine the data and identify the potential outlier.
5. Recalculate the marketing cost function, removing the potential outlier.
6. Which of the two cost functions you calculated would be appropriate to use in estimating future marketing costs? Why?