Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information...
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Accounting
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
$ 49,620
2
1,500
30,225
3
4,400
72,420
4
2,800
49,140
5
2,300
41,865
6
1,200
25,860
7
2,000
37,500
Required (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
(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:
Month
Sales Orders
Order-Processing Costs
1
3,000
$ 82,700
2
1,500
50,375
3
4,400
120,700
4
2,800
81,900
5
2,300
69,775
6
1,200
43,100
7
2,000
62,500
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