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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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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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