E15-19

Editin E15-19: Scatter Diagrams & High-Low Cost Estimation Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs. Month Sales Orders Order-Processing Costs ($) 1 3,300 $90,970 N 1,650 $55,412 3 4,840 $132,770 4 3,080 $90,090 5 2,530 $76,752 1,320 $47,410 2,200 $68,750 A. Use information from the high- and low- volume months to develop a cost-estimating equation for the monthly order processing costs B. Plot the data on a scatter diagram. Using the information from the representative high- and low- volume months, develop a cost estimating equation for the monthly production costs C. What factors have caused the difference in the equations developed for requirements (a) and (b)