Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Company’s 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: Intercept 15,021 (rounded to the nearest dollar)X variable 1 9.74 (rounded to the nearest cent) Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the vari-able rate. 2. If Dohini Manufacturing Company estimates that next month will have 430 purchaseorders, what is the total estimated purchasing cost for that month? (Round your answer tothe nearest dollar.)3. 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? (Round youranswer to the nearest dollar.) What is the total fixed purchasing cost? Why doesn’t it equalthe fixed cost calculated in Requirement 1?
Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Company’s 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:
Intercept 15,021 (rounded to the nearest dollar)
X variable 1 9.74 (rounded to the nearest cent)
Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the vari-
able 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 doesn’t it equal
the fixed cost calculated in Requirement 1?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
