Jack Webber is the new manager of the materials storeroom for Sutherland Manufacturing. Jack has been asked to estimate future monthly purchase costs for part no. 123, used in two of Sutherland Manufacturings products. Jack has cost of purchase and quantity data for the past nine months as follows:

Using the highlow method determine the equation to estimate the cost of product 123 (10 marks)

b) Using the equation from requirement 1, calculate the future expected purchase costs for each of the last three months of the year (15 marks)

c) Jack uses the first nine months data to determine the cost function of regression analysis and obtained the following: y = $2 582.57 + 3.54X. Use the regression results to calculate the expected purchase costs for October, November and December then compare to the result of high-low method (requirement b) and put your comment

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Question 1 Jack Webber is the new manager of the materials storeroom for Sutherland Manufacturing. Jack has been asked to estimate future monthly purchase costs for part no. 123, used in two of Sutherland Manufacturing's products. Jack has cost of purchase and quantity data for the past nine months as follows: Month Cost of purchase Quantity purchased January $12 675 2 710 parts February 13 000 2 810 March 17 653 4 153 April 15 825 3 756 May 13 125 2 912 June 13 814 3 387 July 15 300 3 622 August 10 233 2 298 September 14 950 3 562 Estimated monthly purchases for this part, based on expected demand of the two products for the rest of the year, are: Month Purchase quantity expected October November December 3 340 parts 3 710 3 040 Required (10 marks) (15 marks) a) Using the high-low method determine the equation to estimate the cost of product 123 Using the equation from requirement 1, calculate the future expected purchase costs for each of the last three months of the year c) Jack uses the first nine months data to determine the cost function of regression analysis and obtained the following: y = $2 582.57 +3.54X. Use the regression results to calculate the expected purchase costs for October, November and December then compare to the result of high-low method (requirement b) and put your comment. (25 marks)