Suppose the College of Engineering is planning to sell merchandise this year. They don't know how many students will be interested or how many will sell, so they've received three quotes for orders of different sizes. Assume the relationship is linear or best fit. Cost Quote Units Small Order Medium Order Large Order Extra Large Order a) What is the fixed cost? $ b) What are the Variable Costs? $ c) If the merchandise is very popular among students and they need 2,000 units, what do you predict it would cost, based on the above calculations? $ 220 445 900 1500 $5,000 $10,000 $18,900 $24,000

Suppose the College of Engineering is planning to sell merchandise this year. They don't know how many students will be interested or how many will sell, so they've received three quotes for orders of different sizes. Assume the relationship is linear or best fit. Cost Quote Units Small Order Medium Order Large Order Extra Large Order a) What is the fixed cost? $ b) What are the Variable Costs? $ c) If the merchandise is very popular among students and they need 2,000 units, what do you predict it would cost, based on the above calculations? $ 220 445 900 1500 $5,000 $10,000 $18,900 $24,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 5CE: Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and...

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Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are: Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. 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? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesnt it equal the fixed cost calculated in Requirement 1?
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