Question: 10-27 Estimating a cost function, high-low method. FlyHigh Vacations offers helicopter service from suburban towns to Heathrow Airport in the United Kingdom. Each of its
10-27 Estimating a cost function, high-low method. FlyHigh Vacations offers helicopter service from suburban towns to Heathrow Airport in the United Kingdom. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. The records indicate that a helicopter that has made 1,000 round-trips in the year incurs an average operating cost of $350 per round-trip, and one that has made 2,000 round-trips in the year incurs an average operating cost of $300 per round-trip. 1. Using the high-low method, estimate the linear relationship y = a + bx, where yis the total annual oper ating cost of a helicopter and Xis the number of round-trips it makes to Heathrow Airport during the year. 2. Give examples of costs that would be included in a and in b. 3. If FlyHigh Vacations expects each helicopter to make, on average, 1.200 round-trips in the coming year, what should its estimated operating budget for the helicopter fleet be
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