McCartney Services Has a Customer Web Site to Take Orders

question 258

Essay

McCartney Services has a customer Web site to take orders, answer customer questions, and address customer complaints. The costs associated with this customer Web site over the past six months are listed below:
Management at McCartney Services believes that the customer Web site costs are a mixed cost and would like to use the high-low method to estimate their future costs using the number of Web site hits in any given month as the cost driver.
Required:
1. Using the high-low method, estimate the variable cost per Web site hit and the monthly fixed costs associated with the customer Web site.
2. Use the results you computed in Requirement 1 to write the cost equation to estimate the customer Web site expenses for McCartney Services.
3. If McCartney Services expects 9,500 Web site hits for July, what are their anticipated customer Web site costs for July?

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Definitions:

Managing Store

The process of overseeing and controlling the operations of a retail store.

Retail Pricing

The strategy and process of setting the sale price of goods sold directly to the consumer, taking into account factors like cost, market demand, and competition.

Store Location

The geographical place where a retail store is situated, which can significantly affect its foot traffic and profitability.

Markup

Markup refers to the difference between the cost of a good or service and its selling price, expressed as a percentage of the cost.