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.

Required 

a Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. 6. 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.

c. What factors might have caused the difference in the equations developed for requirements

(a) and (by?

Transcribed Image Text:

Month 1234567 Sales Orders 3,000 Order-Processing Costs $ 82,700 1,500 50,375 4,400 120,700 2,800 81,900 2,300 69,775 1,200 43,100 7 2,000 62,500