Analyze mixed costs using the High-low method: Variable rate per purchase order, fixed costs per month, total cost formula, total predicted cost.

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Question 4: Analyze mixed costs using the High-Low Method Westergard Products, Inc., a discount store, has gathered data on its overhead activities and associated costs for the past 12 months. Al Westergard, a member of the CFO's office, believes that overhead activities and costs should be classified into groups that have the same driver. Alhas decided that unloading incoming goods, counting goods, and inspecting goods can be grouped together as a more general receiving activity, since these three activities are all driven by the number of purchase orders. The following 12 months of data have been gathered for the receiving activity: Month Purchase orders Costs 16,000 January 9.500 February 15,750 10,500 March 10,000 13,500 April 14,960 10,000 8,000 12,400 May 11,000 June 15,920 July 10,000 15,920 16,880 August 12,000 14,000 September 18,080 18,000 October 19280 November 20,000 22,000 December 19,000 18,500 Required: 1. Using the high-low method, compute the variable rate per purchase order. Variable rate per purchase order: 2. Compute the fixed cost per month. Fixed cost per month: 3. Write the total cost formula for purchase orders: Total Cost 4. Calculate the total predicted cost for the month of September for 3,000 purchase orders using the formula found in requirement 3 Total predicted cost for September