Using Multiple Regression Results to Construct and Apply a Cost Formula The controller for McGarvey Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (for example, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard orders for the past 12 months and added that information to the data on purchasing cost and total number of purchase orders. Number of Number of Purchase Nonstandard Purchasing Cost Month Orders Orders January $19,250 370 61 February 18,050 330 40 March 18,200 320 35 April 18,050 410 14 May 19,345 400 73 June 55 19,500 450 July 19,670 460 30 August 80 20,940 560 September 51 19,430 440 October 75 20,020 600 November 12 18,800 470 December 27 19,340 480 Previous Next Check My Work e DOOMarks El Rei Chapter 3 BEX eBook Print Item December 19.340 480 27 Multiple regression was run on the above data; the coefficients shown by the regression program are: Intercept 15,626 (rounded to the nearest dollar) X variable 1 6.38 (Founded to the nearest cent) X variable 2 16.90 (rounded to the nearest cent) Required: 1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate. - S * Purchase orders) + ( x Nonstandard orders) 2. If McGarvey Manufacturing Company estimates that next month will have 480 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for that month? (Round your answer to the nearest dollar.) 3. What if McGarvey Manufacturing wants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 550 nonstandard order? What will estimated total purchasing cost be? (Round your answer to the nearest dollar) What is the total fixed purchasing cost? Previous Next Check My Work