Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. In Exercise
In Exercise 3.4
The controller for Dohini Manufacturing ran regression on the data, and the coefficients shown by the regression program are:
Intercept .... 15,021
X variable 1 .... 9.74
1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.
2. If Dohini Manufacturing Company estimates that next month will have 430 purchase orders, what is the total estimated purchasing cost for that month?
3. 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 doesnt it equal the fixed cost calculated in Requirement 1?
This problem has been solved!
Step by Step Answer: