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1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 8.03 X +(s 8.03 Xx Purchase orders) 8.03 Xx Nonstandard orders) 2. If McGarvey Manufacturing Company estimates that next month will have 490 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 500 nonstandard orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) 23,507 X What is the total fixed purchasing cost?

1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 8.03 X +(s 8.03 Xx Purchase orders) 8.03 Xx Nonstandard orders) 2. If McGarvey Manufacturing Company estimates that next month will have 490 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 500 nonstandard orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) 23,507 X What is the total fixed purchasing cost?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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The controller for McGarvey Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (for example, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard orders for the past 12 months and added that information to the data on purchasing cost and total number of purchase orders. Month January February March May July August September October November December Purchasing Cost Intercept X variable 1 X variable 2 Required: $19,250 18,050 18,200 18,050 19,345 19,500 19,670 20,940 19,430 20,020 18,800 19,340 Number of Purchase Orders 370 330 320 410 400 450 460 560 440 600 470 480 Number of Nonstandard Orders 61 40 35 73 55 30 80 51 75 12 27 Multiple regression was run on the above data; the coefficients shown by the regression program are: 14,530 (rounded to the nearest dollar) 6.30 (rounded to the nearest cent) 16.8 (rounded to the nearest cent) 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 8.03 X +($ 8.03 X x Purchase orders) + 2. If McGarvey Manufacturing Company estimates that next month will have 490 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 8.03 Xx Nonstandard orders) 3. What if McGarvey Manufacturing mants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 590 nonstandard orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) 23,507 X What is the total fixed purchasing cost?
Transcribed Image Text:The controller for McGarvey Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (for example, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard orders for the past 12 months and added that information to the data on purchasing cost and total number of purchase orders. Month January February March May July August September October November December Purchasing Cost Intercept X variable 1 X variable 2 Required: $19,250 18,050 18,200 18,050 19,345 19,500 19,670 20,940 19,430 20,020 18,800 19,340 Number of Purchase Orders 370 330 320 410 400 450 460 560 440 600 470 480 Number of Nonstandard Orders 61 40 35 73 55 30 80 51 75 12 27 Multiple regression was run on the above data; the coefficients shown by the regression program are: 14,530 (rounded to the nearest dollar) 6.30 (rounded to the nearest cent) 16.8 (rounded to the nearest cent) 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 8.03 X +($ 8.03 X x Purchase orders) + 2. If McGarvey Manufacturing Company estimates that next month will have 490 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 8.03 Xx Nonstandard orders) 3. What if McGarvey Manufacturing mants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 590 nonstandard orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) 23,507 X What is the total fixed purchasing cost?
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