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Home / Questions / Lacy DallasLacy Dallas is examining? customer-service costs in the southern region of CabotCabot Pro

# Lacy DallasLacy Dallas is examining? customer-service costs in the southern region of CabotCabot Pro

Lacy DallasLacy Dallas

is examining​ customer-service costs in the southern region of

CabotCabot

Products.

CabotCabot

Products has more than 200 separate electrical products that are sold with a​ 6-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 \$13,700 220 2 20,000 290 3 12,800 140 4 18,800 395 5 14,200 285 6 22,100 440 7 16,500 330 8 21,200 320
 1 Plot the relationship between​ customer-service costs and number of service reports. Is the relationship economically​plausible? 2 Use the​ high-low method to compute the cost​ function, relating​ customer-service costs to the number of service reports. 3 What​ variables, in addition to number of service​ reports, might be cost drivers of weekly​customer-service costs of CabotCabot ​Products?

Requirement 1. Plot the relationship between​ customer-service costs and number of service reports. Is the relationship economically​ plausible?

Begin by

plotting the relationship

between the​ customer-service costs and the number of service reports. ​(Enlarge the graph to maximum size and use the point tool button displayed to draw the​ graph.)

050100150200250300350400450500\$10,000\$23,000Number of service reportsCustomer-service department costs

interactive graphClick to
enlarge
graph

The relationship between​ customer-service costs and the number of service reports

economically plausible.

Requirement 2. Use the​ high-low method to compute the cost​function, relating​ customer-service costs to the number of service reports.

=

+

Requirement 3. What​ variables, in addition to number of service​ reports, might be cost drivers of weekly​ customer-service costs of

CabotCabot

​Products?

Select two variables that might be cost drivers of weekly​customer-service costs of

CabotCabot

Products.

Apr 08 2020 View more View Less