Following are data on Costs and Quantities of Raw Materials Purchases for the first 9 months of 2020. Cost of Raw Month Materials Quantity of Raw Materials Purchased Purchased January $15,725 3,520 February $13,840 2,950 March $17,256 4,170 April $13,720 2,760 May $15,235 3,225 June $14,976 3,175 July $16,554 3,850 August $17,052 4,035 September $16,983 3,960 Estimated purchases for the last 3 months of 2020 is as follows: Expected Quantity of Month Raw Materials Purchased October 3,660 November 3,780 December 3,890 This is the result of regression analysis on the 9 months data: Regression Statistics Multiple R 0.989808956 R Square 0.97972177 Adjusted R Square 0.97682488 Standard Error 206.677204 Observations ANOVA Significance df SS MS F F Regression 1 14446275.96 14446275.96 338.1977792 3.48331E-07 Residual 7 299008.2665 42715.46664 Total 8 14745284.22 Standard Coefficients Error 1 Stat P-value Intercept 6479.442745 506.3418552 12.79657741 4.12607E-06 Quantity of Raw Materials Purchased 2.623669309 0.142667063 18.39015441 3.48331E-07 Required: 1. Use the high low method to compute the cost function relating the cost of raw material purchases and quantity of raw material purchased (4.5%). 2. Using the equation from requirement 1, calculate the future expected purchase cost of raw material for each of the last 3 months of the year (3%). 3. Using the result of regression analysis, determine the cost function relating the cost of raw material purchases and quantity of raw material purchased (Round up to one decimal point) (2%). Compare the regression equation to the equation based on the high-low method. Which is a better fit (1%)? Why? (1.5%) 4. Use the regression result to calculate the expected purchase of October, November, and December (3%). Following are data on Costs and Quantities of Raw Materials Purchases for the first 9 months of 2020. Cost of Raw Month Materials Quantity of Raw Materials Purchased Purchased January $15,725 3,520 February $13,840 2,950 March $17,256 4,170 April $13,720 2,760 May $15,235 3,225 June $14,976 3,175 July $16,554 3,850 August $17,052 4,035 September $16,983 3,960 Estimated purchases for the last 3 months of 2020 is as follows: Expected Quantity of Month Raw Materials Purchased October 3,660 November 3,780 December 3,890 This is the result of regression analysis on the 9 months data: Regression Statistics Multiple R 0.989808956 R Square 0.97972177 Adjusted R Square 0.97682488 Standard Error 206.677204 Observations ANOVA Significance df SS MS F F Regression 1 14446275.96 14446275.96 338.1977792 3.48331E-07 Residual 7 299008.2665 42715.46664 Total 8 14745284.22 Standard Coefficients Error 1 Stat P-value Intercept 6479.442745 506.3418552 12.79657741 4.12607E-06 Quantity of Raw Materials Purchased 2.623669309 0.142667063 18.39015441 3.48331E-07 Required: 1. Use the high low method to compute the cost function relating the cost of raw material purchases and quantity of raw material purchased (4.5%). 2. Using the equation from requirement 1, calculate the future expected purchase cost of raw material for each of the last 3 months of the year (3%). 3. Using the result of regression analysis, determine the cost function relating the cost of raw material purchases and quantity of raw material purchased (Round up to one decimal point) (2%). Compare the regression equation to the equation based on the high-low method. Which is a better fit (1%)? Why? (1.5%) 4. Use the regression result to calculate the expected purchase of October, November, and December (3%)
