Dohini Manufacturing Company had the following 12 months of data on purchasing cost andnumber of purchase orders. Month Purchasing Cost Number of Purchase OrdersJanuary $18,860 370February 18,065 330March 19,250 370April 18,050 410May 19,345 400June 19,500 450July 19,670 460August 20,940 560September 19,430 440October 20,020 500November 18,800 470December 19,340 480 Required:1. Determine the high point and the low point.2. Calculate the variable rate for purchasing cost based on the number of purchase orders.(Round to nearest cent.)3. Calculate the fixed monthly cost of purchasing. (Round to nearest dollar.)4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate.5. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders,what is the total estimated purchasing cost for that month? (Round to nearest dollar.)6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year andexpects 5,340 purchase orders? What will estimated total purchasing cost be? What is thetotal fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 3?(Round to nearest dollar.)
Dohini Manufacturing Company had the following 12 months of data on purchasing cost and
number of purchase orders.
Month Purchasing Cost Number of Purchase Orders
January $18,860 370
February 18,065 330
March 19,250 370
April 18,050 410
May 19,345 400
June 19,500 450
July 19,670 460
August 20,940 560
September 19,430 440
October 20,020 500
November 18,800 470
December 19,340 480
Required:
1. Determine the high point and the low point.
2. Calculate the variable rate for purchasing cost based on the number of purchase orders.
(Round to nearest cent.)
3. Calculate the fixed monthly cost of purchasing. (Round to nearest dollar.)
4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate.
5. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders,
what is the total estimated purchasing cost for that month? (Round to nearest dollar.)
6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and
expects 5,340 purchase orders? What will estimated total purchasing cost be? What is the
total fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 3?
(Round to nearest dollar.)
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