ETutor Is an Online Tutoring Service Provider That Is Particularly

question 183

Essay

ETutor is an online tutoring service provider that is particularly popular with college students. The company is interested in estimating the fixed and variable components of its tutoring services costs. The manager believes that these costs are driven by the number of hours of tutoring services provided. The following information was gathered for the last six months of business: $\begin{array}{|l|r|r|}\hline \text { Month } & \text { Number of Hours } & \\\hline \text { January } & 25,000 & \text { Tutoring costs } \\\hline \text { February } & 41,000 & \$ 308,000 \\\hline \text { March } & 29,000 & 420,000 \\\hline \text { Apnl } & 31,000 & 352,000 \\\hline \text { May } & 34,000 & 373,000 \\\hline \text { June } & 18,000 & 378,000 \\\hline\end{array}$
Required:
1) Compute the average tutoring cost per hour for the six-month period.
2) Use the high-low method to estimate the total fixed cost and the variable cost per hour.
3) Name one advantage and one disadvantage of the high-low method.
4) Describe the scatter graph method that can be used to analyze mixed costs.

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Definitions:

Barbiturates

Depressant drugs, such as Nembutal and Seconal, that decrease central nervous system activity.

Depressant Drugs

A class of substances that reduce the activity of the central nervous system, leading to sedation, relaxation, and decreased inhibition.

Central-Nervous-System Activity

Refers to the functions and processes carried out by the brain and spinal cord.

Maturational

Related to or involving the process of maturation or coming of age, involving the natural progression of physical or psychological growth and development.