High-Low Method to Determine Fixed Cost and Variable RateDohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.Number ofPurchasingPurchaseMonthJanuaryFebruaryMarchAprilMayJuneJulyAugustSeptemberOctoberNovemberDecemberCost$18,86018.04019,25018,05019,34519,50019,67021.04019,43020,02018,80019,340Orders370320370410400450460570440500470480Required:1. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month?2. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be?3. What is the total fixed purchasing cost?4. Why doesn't it equal the fixed cost calculated in Requirement 3 above? December19,340480Required:1. Determine the high point and the low point.Month with high number of purchase ordersMonth with low number of purchase orders2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.)per purchase order3. Calculate the fixed monthly cost of purchasing.4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent.Total purchasing cost5. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month?6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be?What is the total fixed purchasing cost?Why doesn't it equal the fixed cost caloulated in Requirement 3 above? High-Low Method to Determine Fixed Cost and.Variable RateDohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.Number ofPurchasingPurchaseMonthCostOrdersJanuary$18,860370February18,040320March19,250370April18,050410May19,345400June19,500450July19,670460August21,040570September19,430440October20,020500November18,800470December19,340480Required:

Answered: igh-Low Method to Determine Fixed Cost…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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High-Low Method to Determine Fixed Cost and Variable Rate Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Number of Purchasing Purchase Month January February March April May June July August September October November December Cost $18,860 18.040 19,250 18,050 19,345 19,500 19,670 21.040 19,430 20,020 18,800 19,340 Orders 370 320 370 410 400 450 460 570 440 500 470 480 Required: 1. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month? 2. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be? 3. What is the total fixed purchasing cost? 4. Why doesn't it equal the fixed cost calculated in Requirement 3 above?

December
19,340
480
Required:
1. Determine the high point and the low point.
Month with high number of purchase orders
Month with low number of purchase orders
2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.)
per purchase order
3. Calculate the fixed monthly cost of purchasing.
4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent.
Total purchasing cost
5. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month?
6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be?
What is the total fixed purchasing cost?
Why doesn't it equal the fixed cost caloulated in Requirement 3 above?

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