What variables be cost drivers of weekly customer-service

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Reference no: EM132930258

Question - Lynsay Detz is examining customer-service costs in the southern region of Clancey Products. Clancey 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

$13,400

210

2

20,200

300

3

11,300

130

4

18,900

385

5

14,700

285

6

22,500

450

7

16,300

330

8

21,600

310

Required -

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 Clancey Products?

Reference no: EM132930258

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