Lynn DiLuigi is examining customer-service costs in the southern region of Cabo Products. Cabo 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:
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Read the requirements.
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 Cabo Products?
Select two variables that might be cost drivers of weekly customer-service costs of Cabo Products
Data table
Week
Customer-Service
Department Costs
Number of
Service Reports
Week 1
$13,500
195
Week 2
20,800
270
Week 3
12,800
140
Week 4
18,100
395
Week 5
14,500
285
Week 6
22,100
440
Week 7
16,200
310
Week 8
21,800
325
- X
