Question
Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs.
Scatter Diagrams and High-Low Cost Estimation
Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs.
Month | Sales Orders | Order-Processing Costs | |
---|---|---|---|
1 | 3,000 | $ 132,320 | |
2 | 1,500 | 80,600 | |
3 | 4,400 | 193,120 | |
4 | 2,800 | 131,040 | |
5 | 2,300 | 111,640 | |
6 | 1,200 | 68,960 | |
7 | 2,000 | 100,000 |
Required
(a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
(b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for monthly production costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram
Month | Sales Orders | Order-Processing Costs | |
---|---|---|---|
1 | 3,000 | $ 132,320 | |
2 | 1,500 | 80,600 | |
3 | 4,400 | 193,120 | |
4 | 2,800 | 131,040 | |
5 | 2,300 | 111,640 | |
6 | 1,200 | 68,960 | |
7 | 2,000 | 100,000 |
$
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