# Question

Madrigal Theater Company is interested in estimating fixed and variable costs. The following data are available:

Required

a. Use the high-low method to estimate fixed cost per month and variable costs per ticket sold [i.e., estimate a and b in the equation Cost = a + (b x # of tickets) using the high-low method].

b. Madrigal Theater Company is considering an advertising campaign that is expected to increase annual sales by 14,000 tickets. Assume that the ticket selling price is $25.Ignoring the cost of the advertising campaign, what is the expected increase in profit associated with the advertising campaign?

c. (optional) Repeat part a using regression analysis. In light of the result, how would you answer partb?

Required

a. Use the high-low method to estimate fixed cost per month and variable costs per ticket sold [i.e., estimate a and b in the equation Cost = a + (b x # of tickets) using the high-low method].

b. Madrigal Theater Company is considering an advertising campaign that is expected to increase annual sales by 14,000 tickets. Assume that the ticket selling price is $25.Ignoring the cost of the advertising campaign, what is the expected increase in profit associated with the advertising campaign?

c. (optional) Repeat part a using regression analysis. In light of the result, how would you answer partb?

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