Cost estimation; high-low; regression: wholesaler Requirements 2 and 3 only PipeDream Supplies is a wholesaler of a large variety of pipes and other plumbing needs.

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Cost estimation; high-low; regression: wholesaler

Requirements 2 and 3 only

PipeDream Supplies is a wholesaler of a large variety of pipes and other plumbing needs. The company's accountant, Bobbi Esbend, has recently completed a cost study of the firm's shipping department in which she used the weight of supplies loaded or unloaded at the company's loading dock to quantify the department's

activity. Bobbi compiled the following data.

Month Supplies loaded or unloaded (kg) Shipping department costs January 5400 $35 100 February 4800 33 900 March 3900 33 750 April 3000 30 600 May 6600 33 300 June 7200 37 650 July 6000 36 000 August 5400 34 200 September 7800 36 360 October 3 300 33 150 November 3600 34 050 December 4200 34 050 Required: 1. Draw a scatter diagram of the cost data for the shipping department. 2. Estimate the shipping department's cost behaviour 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 department's costs for a month when loads totalling 4 500 kilograms are moved