Devon's Yukon Pancake Restaurant features sourdough pancakes made from a strain of sourdough dating back to the Alaskan Gold Rush. To plan for the future, Devon needs to figure out his cost behavior patterns. He has the following information about his operating costs and the number of pancakes served:
Month Number of Pancakes Total Operating Costs
July.......................................3,700..................................................$2,330
August..................................4,100..................................................$2,410
September............................3,200..................................................$2,320
October................................3,400..................................................$2,260
November............................3,800..................................................$2,520
December.............................3,500..................................................$2,500
Requirements
1. Prepare a scatter plot of Devon's pancake volume and operating costs.
2. Do the data appear sound, or do there appear to be any outliers? Explain.
3. Based on the scatter plot, do operating costs appear to be variable, fixed, or mixed costs?
4. How strong of a relationship is there between pancake volume and operating costs?