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:

Income-Sharing Ratio

The predetermined formula used among business partners or within an organization to divide profits or losses among stakeholders.

Revenue Per Employee

A measure of the efficiency of the business in generating revenues, which is computed as revenue divided by number of employees.

LLC Members

Individuals or entities that own a portion of a Limited Liability Company (LLC) and have rights and responsibilities as outlined in the LLC's operating agreement.

Business Expansion

The process by which a company increases its size, operations, or market reach, often through investments in new facilities, acquisitions, or increasing workforce.