Madrigal Theater Company is interested in estimating fixed and variable costs. The following data are available:
a. Use the high-low method to estimate fixed cost per month and variable costs per ticket sold [i.e., estimate a and b in the equation Cost = a + (b × # of tickets) using the high-low method].
b. Madrigal Theater Company is considering an advertising campaign that is expected to increase annual sales by 15,000 tickets. Assume that the ticket selling price is $25. Ignoring the cost of the advertising campaign, what is the expected increase in profit associated with the advertising campaign?
c. (Optional) Repeat part a using regression analysis. In light of the result, how would you answer part b? Round unit variable cost to five decimal places.