.11 96% 3:13 PM Module 15 HW https://mybusinesscourse.com Menu glenn vaca- Scatt

Question

.11 96% 3:13 PM Module 15 HW https://mybusinesscourse.com Menu glenn vaca- 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 Sales Orders Order-Processing Costs Month 3,000 1,500 4,400 2,800 2,300 1,200 2,000 $ 49,620 30,225 72,420 49,140 41,865 25,860 37,500 2 4. 7 Required (a.) Use information from the high- and low volume months to develop a cost- estimating equation for monthly order- processing costs. 0 0

Explanation / Answer

1 High low cost method Cost at 4400 orders 72420 Cost at 1200 orders 25860 Highest sales orders 4400 Lowest sales orders 1200 Variable cost per unit = (72420-25860)/(4400-1200) =   14.55 Per sales order Fixed cost = 72420 - 4400*14.55 8400 2 equation Y = A + BX , Y = 8400 + 4400*14.55 per sales order

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