(CIMA, adapted) Catherine McCarthy, sales manager of Baxter Arenas, is checking to see if there is any relationship between promotional costs and ticket rev- enues at the sports stadium. She obtains the following data for the past 9 months: Promotional Costs $52,000 65,000 80,000 Month Ticket Revenues April May June $200,000 270,000 320,000 480,000 July August September 90,000 100,000 110,000 430,000 450,000 October 540,000 120,000 November 670,000 180,000 197,000 December 751,000 She estimates the following regression equation: Ticket revenues = $65,583 + ($3.54 x Promotional costs)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Use the high-low method to compute the function relating promotional costs and revenues.

(CIMA, adapted) Catherine McCarthy, sales manager of
Baxter Arenas, is checking to see if there is any relationship between promotional costs and ticket rev-
enues at the sports stadium. She obtains the following data for the past 9 months:
Promotional Costs
$52,000
65,000
80,000
Month
Ticket Revenues
April
May
June
$200,000
270,000
320,000
480,000
July
August
September
90,000
100,000
110,000
430,000
450,000
October
540,000
120,000
November
670,000
180,000
197,000
December
751,000
She estimates the following regression equation:
Ticket revenues =
$65,583 + ($3.54 x Promotional costs)
Transcribed Image Text:(CIMA, adapted) Catherine McCarthy, sales manager of Baxter Arenas, is checking to see if there is any relationship between promotional costs and ticket rev- enues at the sports stadium. She obtains the following data for the past 9 months: Promotional Costs $52,000 65,000 80,000 Month Ticket Revenues April May June $200,000 270,000 320,000 480,000 July August September 90,000 100,000 110,000 430,000 450,000 October 540,000 120,000 November 670,000 180,000 197,000 December 751,000 She estimates the following regression equation: Ticket revenues = $65,583 + ($3.54 x Promotional costs)
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