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 1 3,000 $ 99,240 1,500 4,400 2 3 4 5 6 7 2,800 2,300 1,200 2.000 60,450 144,840 98,280 83,730 51,720 75,000 NOTE: Round variable cost per unit answers to two decimal places, if appropriate. (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. S+S X
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 1 3,000 $ 99,240 1,500 4,400 2 3 4 5 6 7 2,800 2,300 1,200 2.000 60,450 144,840 98,280 83,730 51,720 75,000 NOTE: Round variable cost per unit answers to two decimal places, if appropriate. (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. S+S X
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A7
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
1
3,000
$ 99,240
60,450
2
3
4
5
6
1,500
7
4,400
2,800
2,300
1,200
51,720
75,000
NOTE: Round variable cost per unit answers to two decimal places, if appropriate.
(a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
$__________+$________
144,840
2,000
98,280
83,730
(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:
$_____
+$_____________X
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