Use the high-low method to compute the cost function


May Lau is examining customer-service costs in the Shatin branch of Unique Products. Unique Products has more than 200 separate electrical products that are sold with a six-month guarantee of full repair or replacement with a new product. When a product is returned by a customer, a service report is prepared. This service report includes details of the problem and the time and cost of resolving the problem. Weekly data for the most recent 8-week period are as follows:

Week                         Customer Service Department Costs               Number of Service Reports

   1                                           $27,400                                                             190

   2                                           41,800                                                              275

   3                                           26,000                                                              115

   4                                           37,600                                                              395

   5                                           28,000                                                              265

   6                                           43,000                                                              455

   7                                           33,800                                                              340

   8                                           42,000                                                              305

Required

a. Use the high-low method to compute the cost function, relating customer-service costs to the number of service reports

b. Suggest what variables, in addition to number of service reports, might be the cost drivers of weekly customer -service costs of Unique Products.

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Financial Accounting: Use the high-low method to compute the cost function
Reference No:- TGS01215866

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