# Refer to Cornerstone Exercise 3.4 for data on Dohini Manufacturing Companys purchasing cost and number of purchase orders. In Exercise

## Question:

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

Required:

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 doesn€™t it equal the fixed cost calculated in Requirement 1?

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**Related Book For**

## Cornerstones of Cost Management

**ISBN:** 978-1285751788

3rd edition

**Authors:** Don R. Hansen, Maryanne M. Mowen

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