(a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. $ 8,400 ✔+$14.55 ✓ X (b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for monthly order-processing costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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MN.45.

 

Scatter Diagrams and High-Low Cost Estimation
Assume
the local Pearle Vision has the following information on the number of sales orders received and order-processing costs.
Month Sales Orders Order-Processing Costs
3,000
$ 49,620
30,225
72,420
49,140
41,865
1
2
3
4
5
6
7
1,500
4,400
2,800
2,300
1,200
2,000
25,860
37,500
NOTE: Round variable cost per unit answers to two decimal places, if appropriate.
(a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
$ 8,400 ✔ + $ 14.55
✔ X
(b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for monthly order-processing costs. If needed, an Excel
worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram
$ 8,521.4
X+$14.359
X X
Transcribed Image Text:Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs. Month Sales Orders Order-Processing Costs 3,000 $ 49,620 30,225 72,420 49,140 41,865 1 2 3 4 5 6 7 1,500 4,400 2,800 2,300 1,200 2,000 25,860 37,500 NOTE: Round variable cost per unit answers to two decimal places, if appropriate. (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. $ 8,400 ✔ + $ 14.55 ✔ X (b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for monthly order-processing costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram $ 8,521.4 X+$14.359 X X
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