Zerbel Company, a wholesaler of large, custom-built air conditioning units for commercial buildings, has noticed considerable fluctuation in its shipping expense from month to month, as shown below: Month Units Shipped Total Shipping Expense January. . . . . . . . . . 4 $2,200 February . . . . . . . . .7 $3,100 March . . . . . . . . . . .5 $2,600 April . . . . . . . . . . . . 2 $1,500 May . . . . . . . . . . . . . 3 $2,200 June . . . . . . . . . . . . . 6 $3,000 July . . . . . . . . . . . . . .8 $3,600 Required: 1. Prepare a scatter graph using the data given above. Plot cost on the vertical axis and activity on the horizontal axis. Is there an approximately linear relationship between shipping expense and the number of units shipped? 2. Using the high-low method, estimate the cost formula for shipping expense. Draw a straight line through the high and low data points shown in the scatter graph that you prepared in requirement 1. Make sure your line intersects the Y axis. 3. What factors, other than the number of units shipped, are likely to affect the company’s shipping expense? Explain.
Zerbel Company, a wholesaler of large, custom-built air conditioning units for commercial buildings, has noticed considerable fluctuation in its shipping expense from month to month, as shown below:
Month Units Shipped Total Shipping Expense
January. . . . . . . . . . 4 $2,200
February . . . . . . . . .7 $3,100
March . . . . . . . . . . .5 $2,600
April . . . . . . . . . . . . 2 $1,500
May . . . . . . . . . . . . . 3 $2,200
June . . . . . . . . . . . . . 6 $3,000
July . . . . . . . . . . . . . .8 $3,600
Required:
1. Prepare a scatter graph using the data given above. Plot cost on the vertical axis and activity on the horizontal axis. Is there an approximately linear relationship between shipping expense and the number of units shipped?
2. Using the high-low method, estimate the cost formula for shipping expense. Draw a straight line through the high and low data points shown in the scatter graph that you prepared in requirement 1. Make sure your line intersects the Y axis.
3. What factors, other than the number of units shipped, are likely to affect the company’s shipping expense? Explain.
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