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.

$Answer+ $AnswerX

(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.

$Answer+ $AnswerX

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.

$Answer

+ $Answer

X

(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

$Answer

+ $Answer

X