High-Low Method to Determine Fixed Cost and Variable Rate Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Purchasing Cost Number of Purchase Orders 370 Month January $18,860 February 18,060 320 March 19,250 370 April 18,050 410 May 19,345 400 June 19,500 450 July 19,670 460 August 20,940 560 September 19,430 440 October 20,020 500 November 18,800 470 December 19,340 480 Required: 1. Determine the high point and the low point. Month with high number of purchase orders August Month with low number of purchase orders February 2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.) 12.5 X per purchase order 3. Calculate the fixed monthly cost of purchasing. $ 13,940 x 4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent. Total purchasing cost 13,940 x 12.5 x Purchase orders ) 5. If Dohini Manufacturing Company estimates that next month will have 440 purchase orders, what is the total estimated purchasing cost for that month? 19,440 x 6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be? $ 233,905 x What is the total fixed purchasing cost? $ 167,280 x Why doesn't it equal the fixed cost calculated in Requirement 3 above? because there are 12 months in the year