A Belgian manufacturer of tennis balls is noted for making all its tennis balls exactly the same. The manufacturer, however, is less certain about its costs. The manufacturer has not changed its operating methods in the last 10 years, and the cost of labor and raw materials has remained about the same. The manufacturer has had the following costs and output during the last ten fiscal years:

Plot this data.

a. Identify the highest and lowest output levels.

b. Using the high-low method, estimate the fixed costs of making tennis balls.

c. What are the variable costs per ball?

d. If the manufacturer expects to make 112,000,000 balls, what are the expected costs in the coming year?

e. Why would it be more difficult to estimate the expected costs, if the manufacturer expects to make 150,000,000 balls?

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Year Costs 2006 20,000,000 2007 25,000,000 Number of Balls 50,000,000 75,000,000 2008 30,000,000 105,000,000 2009 28,000,000 100,000,000 2010 32,000,000 110,000,000 2011 23,000,000 80,000,000 2012 35,000,000 120,000,000 2013 31,000,000 115,000,000 2014 36,000,000 118,000,000 2015 22,000,000 90,000,000