Questionhendricks has run the produce club for the first

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Reference no: EM13350374

Question

Hendricks has run the produce club for the first 10-week season. Beforehand becoming a farmer, Harvey had been a business major in college as well as he remembers a few things about cost analysis. In planning for next year, he wants to know how lots of orders will be needed each week for the club to break even, however first he must estimate the club's fixed and variable costs. He has calm the following data over the club's first 10 weeks of operation-

Week number of orders per week weekly total costs

1                      351                                       $18795
2                      385                                        21597
3                      410                                        22800
4                      453                                        22600
5                      425                                        21900
6                      486                                        24600
7                      455                                        23900
8                      467                                        22900
9                      525                                        25305
10                    510                                        24500

1- Plot the relationship among number of orders per week as well as weekly total costs

2- Approximation the cost equation using the high-low method as well as draw this line on your graph

3- Harvey uses his computer to compute the following regression formula

Total weekly costs = $8,631 + ($31.92 X Number of weekly orders)

Depict the regression line on your graph. Use your graph to calculate the regression line using the criteria of economic plausibility, goodness of fit as well as significance of the independent variable. ls the cost function projected using the high-low method a close approximation of the cost function estimated using the regression method? Illuminate briefly.

4- Did Fresh Harvest break even this season? Recollect that each of the families paid a seasonal membership fee of $50

5- Suppose that 900 families join the club next year and that prices and costs don't change. How many orders, on average, should Fresh Harvest receive each week to break even?

Reference no: EM13350374

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