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 $82,700 1,500 50,375 4,400 120,700 2,800 81,900 2,300 69,775 1,200 43,100 2,000 62,500 1 2 3 4 5 6 7 Required (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. = $ 14,000 + $ 24.25 ✔ (b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for mon production costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram x + $ = $ Check
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 $82,700 1,500 50,375 4,400 120,700 2,800 81,900 2,300 69,775 1,200 43,100 2,000 62,500 1 2 3 4 5 6 7 Required (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. = $ 14,000 + $ 24.25 ✔ (b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for mon production costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram x + $ = $ Check
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
$ 82,700
3,000
1,500
50,375
4,400
120,700
2,800
81,900
2,300
69,775
1,200
43,100
2,000
62,500
1
2
3
4
5
6
7
Required
(a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
= $
14,000 + $
(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
production costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram
x + $
= $
24.25
Check
x
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