An expert is looking at the cost behavior patters of hte defendant in an antitrust despute. The expert plans to use the information to prepare a damage estimate. The expert looked at 30 months of cost and sale data for the dept store. The results of the regression-correlation analysis on store's 6 cost categores regressed against sales dollars are as follows:
Account a value b value r squared
Cost of goods sold 45,000 .46 .88
Store salaries 65,000 .055 .72
Store utilities 26,000 .015 .34
Store Maintence 14,000 .08 .035
Advertising 26,000 .01 .001
Corp. Overhead 75,000 .025 .045
A. Use the cost behavior data presented above to make a point estimate of expected costs and net income for the month of July (assuming sales of 980,000)
B. How would you describe (categorize) each of the costs?
C. How strong do you feel about estimations you made in part a?