A Theater is interested in estimating fixed and variable costs. The following data are available:
Total Cost No. of Tickets Sold
January $172,000 20,000
February $176,000 19,500
March $180,500 25,500
April $170,500 21,500
May $190,000 25,000
June $188,000 26,500
Use regression analysis to estimate fixed cost per month and variable costs per ticket sold, show your output and answer the following questions:
REQUIRED:
a. How much is the variable cost per ticket?
b. How much is total fixed cost?
c. What percentage of variance in Total Cost is explained by the number of tickets sold ?
d. Write the total cost equation in good form.
e. MovieTown Theater is considering an advertising campaign that is expected to increase annual sales by 7,000 tickets. Assume that the ticket selling price is $9. What is the expected increase in profit associated with the advertising campaign?