Question - High-low method and regression analysis. Local Harvest, a cooperative of organic family-owned farms outside of Columbus, Ohio, 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 $50, and place their orders a week in advance for a price of $40 per week. In turn, Local Harvest delivers fresh-picked seasonal local produce to several neighborhood distribution points. Eight hundred families joined the club for the first season, but the number of orders varied from week to week.
Harvey Hendricks has run the produce club for the first 10-week season. Before becoming a farmer, Harvey had been 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 Weekly Total Cost
1 351 18,795
2 385 21,597
3 410 22,800
4 453 22,600
5 425 21,900
6 486 24,600
7 455 23,900
8 467 22,900
9 525 25,305
10 510 24,500
Plot the relationship between number of orders per week and weekly total costs.