Task
Separate the fixed and variable elements of total costs using a suitable method in a given situation.
The following information concerning sales revenues and website hits of Cool Blue company for the last four years have been as follows:
|
Years
|
sales Revenue($)
|
Website hits (units)
|
|
2011
|
110,000
|
70,000
|
|
2012
|
115,000
|
80,000
|
|
2013
|
111,000
|
77,000
|
|
2014
|
97,000
|
60,000
|
Variable cost per unit and total fixed cost is constant within this range of activity.
1. Using the above identify suitable method to separate the fixed and variable elements of total costs and explain it.
2. Using the identified method calculate the revenue that should be expected in year 2015 when hits is expected to be 75,000 units.