# Question

Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.

Required:

1. Determine the high point and the low point.

2. Calculate the variable rate for purchasing cost based on the number of purchase orders.

3. Calculate the fixed monthly cost of purchasing. (Round to nearest dollar.)

4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate.

5. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round to nearest dollar.)

6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? What is the total fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 3?

Required:

1. Determine the high point and the low point.

2. Calculate the variable rate for purchasing cost based on the number of purchase orders.

3. Calculate the fixed monthly cost of purchasing. (Round to nearest dollar.)

4. Write the cost formula for the purchasing activity showing the fixed cost and the variable rate.

5. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month? (Round to nearest dollar.)

6. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,340 purchase orders? What will estimated total purchasing cost be? What is the total fixed purchasing cost? Why doesn’t it equal the fixed cost calculated in Requirement 3?

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