The controller for Suenos Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (for example, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard orders for the past 12 months and added that information to the data on purchasing cost and number of purchase orders.

Required:
1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.
2. If Suenos Manufacturing Company estimates that next month will have 430 purchase orders and 45 nonstandard 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 and 580 nonstandard orders? What will estimated total purchasing cost be? What is the total fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 2 above? (Round your answers to the nearest dollar. )LO1

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Purchasing Number of Number of Month Cost Purchase Orders Nonstandard Orders January $20,068 330 35 February 20,890 370 61 March 20,750 410 14 April 22,050 400 73 May 21,900 450 55 June 21,300 460 30 July 23,426 560 80 August 21,670 440 51 September 22,250 500 50 October 21,200 470 12 November 21,800 480 27 December 20,800 370 53 Multiple regression was run on the above data; the coefficients shown by the regression program (rounded to the nearest cent) are: Intercept X variable 1 X variable 2 15,866.55 10.90 19.54