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High-Low Method to Determine Fixed Cost and Variable Rate McGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of
High-Low Method to Determine Fixed Cost and Variable Rate McGarvey Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Month January February March April May June July August September October November December Required: Purchasing Cost $19,250 18,060 $ 18,200 18,050 19,345 19,500 Total purchasing cost 19,670 21,420 19,430 20,020 18,800 19,340 Month with high number of purchase orders Month with low number of purchase orders Number of Purchase Orders 370 320 340 + ($ 410 400 450 460 600 440 1. Determine the high point and the low point. 570 470 2. Calculate the variable rate for purchasing cost based on the number of purchase orders. (Round to the nearest cent.) per purchase order 3. Calculate the fixed monthly cost of purchasing. 480 4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate. Round variable rate to the nearest cent. 5. If McGarvey Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month? 6. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 5,350
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