Question
Cost estimation; high-low; regression: wholesaler Qs. 1. Pipe Dream Suppliers is a wholesaler of a large variety of pipes and other plumbing needs. The companys
Cost estimation; high-low; regression: wholesaler
Qs. 1. Pipe Dream Suppliers is a wholesaler of a large variety of pipes and other plumbing needs. The companys accountant Bobbi Esbend, has recently completed a cost study of the firms shipping department in which she used the weight of supplies loaded or unloaded at the companys loading dock to quantify the departments activity. Bobbi compiled the following data.
Month | Supplies loaded or unloaded (kg) | Shipping department costs |
January | 5400 | $35100 |
February | 4800 | 33900 |
March | 3900 | 33750 |
April | 3000 | 30600 |
May | 6600 | 33300 |
June | 7200 | 37650 |
July | 6000 | 36000 |
August | 5400 | 34200 |
September | 7800 | 36360 |
October | 3300 | 33150 |
November | 3600 | 34050 |
December | 4200 | 34050 |
Required:
2. estimate the shipping departments cost behavior using the high-low method. Use an equation to express the results of this estimation method.
3. using the equation estimated in requirement 2, predict the shipping departments cost for a month when loads totaling 4500 kilograms are moved.
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