Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores...
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Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home remodelers, contractors, and do-it-yourself customers. The managers at Waveney are interested in understanding what drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast Region is interested in new data analysis approaches to management and offered to run a test using data from the 14 stores in the region. The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store costs: store area (square footage) and revenue. The following data were collected from the most recent year of operations (revenues and costs in thousands of dollars). Store Revenues (5000) Area (Square Costs Feet) (5000) $ $ SE-01 69,147 20,545 15,799 SE-02 15,482 51,417 12,495 SE-03 25,721 83,331 19,210 SE-04 19,389 61,374 15,079 SE-05 19,666 58,509 15,112 SE-06 17,756 67,374 14,099 SE-07 24,505 95,748 18,691 SE-08 12,701 46,098 10,747 SE-09 23,081 78,012 17,453 SE-10 15,830 62,055 12,864 SE-11 20,358 65,601 15,633 SE-12 17,120 72,693 13,797 SE-13 13,674 62,055 11,570 SE-14 22,904 74,466 17,294 Required: a. Use the high-low method to estimate the fixed and variable portions of store costs based on store area. b. The managers in the region are interested in opening a new store with expected area of 50,000 square feet. Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-16), what are the estimated store costs for store SE-16? c. Managers are also considering a concept store focused on downtown home and condo owners. These stores would have a much smaller area and carry a narrower range of products. The managers envision such stores being an average of 35,000 square feet. What are the estimated store costs for the average concept store? Complete this question by entering your answers in the tabs below. Required Required Required A B C Use the high-low method to estimate the fixed and variable portions of store costs based on store area. Note: Round variable cost answer to 2 decimal places. Enter Fixed cost answer in thousands of dollars rounded to 2 decimal places. Variable cost Fixed cost per square foot Show less Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home remodelers, contractors, and do-it-yourself customers. The managers at Waveney are interested in understanding what drives costs as well as getting better cost estimates when planning new stores. The area manager for the Southeast Region is interested in new data analysis approaches to management and offered to run a test using data from the 14 stores in the region. The initial thoughts of the managers and the financial analysts in the region were that two primary factors drove store costs: store area (square footage) and revenue. The following data were collected from the most recent year of operations (revenues and costs in thousands of dollars). Store Revenues (5000) Area (Square Costs Feet) (5000) $ $ SE-01 69,147 20,545 15,799 SE-02 15,482 51,417 12,495 SE-03 25,721 83,331 19,210 SE-04 19,389 61,374 15,079 SE-05 19,666 58,509 15,112 SE-06 17,756 67,374 14,099 SE-07 24,505 95,748 18,691 SE-08 12,701 46,098 10,747 SE-09 23,081 78,012 17,453 SE-10 15,830 62,055 12,864 SE-11 20,358 65,601 15,633 SE-12 17,120 72,693 13,797 SE-13 13,674 62,055 11,570 SE-14 22,904 74,466 17,294 Required: a. Use the high-low method to estimate the fixed and variable portions of store costs based on store area. b. The managers in the region are interested in opening a new store with expected area of 50,000 square feet. Assuming the data and cost estimates from the current stores are appropriate for the new store (SE-16), what are the estimated store costs for store SE-16? c. Managers are also considering a concept store focused on downtown home and condo owners. These stores would have a much smaller area and carry a narrower range of products. The managers envision such stores being an average of 35,000 square feet. What are the estimated store costs for the average concept store? Complete this question by entering your answers in the tabs below. Required Required Required A B C Use the high-low method to estimate the fixed and variable portions of store costs based on store area. Note: Round variable cost answer to 2 decimal places. Enter Fixed cost answer in thousands of dollars rounded to 2 decimal places. Variable cost Fixed cost per square foot Show less
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