Jerry Thomas is the manger for the storeroom for Classic Manufacturing. He was asked to estimate the future monthly purchase costs for part number 782. Jerry collected the cost and quantity data for the past nine months as provided below.

Month	Purchase cost	Quantity Purchased
January	$ 12,925	2,762
February	$ 13,250	2,862
March	$ 17,903	4,212
April	$ 16,075	3,818
May	$ 13,375	2,966
June	$ 14,064	3,447
July	$ 15,550	3,685
August	$ 10,483	2,356
September	$ 15,200	3,636

Estimated monthly purchases of part 782 for the following three months are:

October 3,590

November 3,960

December 3,290

Required:

1. Use the high-low method to develop a linear formula to estimate the purchase costs for the parts to be purchased for the rest of the year

2. Use the formula in (a) to estimate the purchase costs for each of the months October to December.

3. Use the regression method to develop a formula to estimate the purchase costs for the parts to be purchased for the rest of the year.

4. Use the formula in (c) to estimate the purchase costs for each of the months October to December.

5. What are your comments on the results in (b) and (d) above?

Show all your calculations for (a) to (d).