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High low method-monthly shipping cost equation

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Reference no: EM13152717

Silk Flowers & More is an on-line company that specializes in selling silk flower arrangements, offering their customers free shipping on all orders. Management currently is interested in understanding how shipping costs vary with the number of flower arrangements sold. To this end, they have provided you with the following data for the more recent five months of operations:

Month Arrangements Sold Shipping Costs
Jan 5,000 $27,500
Feb 7,500 $33,750
March 6,000 $30,250
April 6,500 $31,000
May 7,000 $32,375

a. Use the high-low method to estimate Silk Flowers & More's monthly shipping cost equation.

b. Assume Silk Flowers & More expects to sell 5,500 flower arrangements in June. Use the cost equation you developed in part (a) to estimate Silk Flowers & More's June shipping costs.

Reference no: EM13152717

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