Mathematics

Estimate the cost equation using the high-low method, and draw this line on your graph.

High-low method and regression analysis. Fresh Choice, a cooperative of organic family-owned farms outside of Madison, Wisconsin, has recently started a fresh produce club to provide support to the group’s member farms and to promote the benefits of eating organic, locally produced food to the nearby suburban community. Families pay a seasonal membership fee of $75 and place their orders a week in advance for a price of $35 per order. In turn, Fresh Choice delivers fresh-picked seasonal local produce to several neighborhood distribution points. Seven hundred families joined the club for the first season, but the number of orders varied from week to week.

Daniel Craig has run the produce club for the first 10-week season. Before becoming a farmer, Daniel had been a business major in college, and he remembers a few things about cost analysis. In planning for next year, he wants to know how many orders will be needed each week for the club to break even, but first he must estimate the club’s fixed and variable costs. He has collected the following data over the club’s first 10 weeks of operation:

Week      Number of Orders per Week    WeeklyTotal Costs

1           353                         $19,005

2           390                         22,605

3           414                         22,850

4           450                          22,500

5           422                          21,950

6           491                          24,750

7          449                           23,650

8          472                          23,005

9          529                          25,275

10         508                          24,350

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