Question: A travel agency had its highest operating costs in June ($26,250), and its lowest operating costs in November ($21,750). The agency sold 1,500 tickets in June and 900 tickets in November.
a. Using the high-low method of cost estimation, compute the fixed and variable components of the travel agency's monthly operating costs.
b. If the travel agency expects to sell 1,900 tickets in December, estimate its operating expenses for December.
c. What concerns might arise about making the December operating expense estimate?