Suenos Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.

The controller for Suenos Manufacturing ran regression on the above data, and the coefficients shown by the regression program (rounded to the nearest cent) are:

Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.
2. IfSuenos Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar. )
3. What if Suenos Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? (Round your answer to the nearest dollar.) What is the total fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 1 above?LO1

Transcribed Image Text:

Month Purchasing Cost Number of Purchase Orders January February March $20,068 330 20,890 370 20,750 410 April 22,050 400 May 21,900 450 June 21,300 460 July 23,426 560 August 21,670 440 September 22,250 500 October 21,200 470 November 21,800 480 December 20,800 370