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 OrdersOrder-Processing Costs1 3,000$ 132,3202 1,50080,6003 4,400193,1204 2,800131,0405 2,300111,6406 1,20068,9607 2,000100,000
Required (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs.
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(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 order-processing costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram
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