Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities...

  

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Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities costs and hours of operation for the last six (6) weeks are as follow: Week Hours of Operation Utilities Cost 1 55 6 480 60 6 600 2 3 4 5 6 64 70 45 40 7 460 7 600 5 400 5 200 Required: a) Use the high-low method to estimate the cost behaviour for the restaurant's utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bx). (4 marks) b) During the second week of June, Bourbon House will be opened for 49 hours. Predict the restaurant's total utilities cost for the week. (2 marks) c) Explain the impact of a decrease in the level of activity on (i) total variable cost; and (ii) variable cost per unit of activity. (1 mark) Bourbon House, a luxury waterfront restaurant, has store hours fluctuate from week to week. Its utilities costs and hours of operation for the last six (6) weeks are as follow: Week Hours of Operation Utilities Cost 1 55 6 480 60 6 600 2 3 4 5 6 64 70 45 40 7 460 7 600 5 400 5 200 Required: a) Use the high-low method to estimate the cost behaviour for the restaurant's utilities costs, assuming that variable costs vary in proportion to the hours of operation. Express the cost behaviour in a cost function (Y = a + bx). (4 marks) b) During the second week of June, Bourbon House will be opened for 49 hours. Predict the restaurant's total utilities cost for the week. (2 marks) c) Explain the impact of a decrease in the level of activity on (i) total variable cost; and (ii) variable cost per unit of activity. (1 mark)

Answer rating: 100% (QA)

Answera Y 2000 80 X Variable Cost per unit Total Fixed Cost Answerb Total Utilities ... View the full answer