F$1$E $10$ Scatter Diagrams and High$-$Low Cost Estimation

pg$.15-25$

Assume the local Pearle Vision has the following information on the number of sales orders received and order$-$processing costs.

$\backslash$table$[[$Month$,$Sales Orders,Order$-$Processing Costs$],[1,3,300,$$ $90,970],[2.,1,650,55,412],[3,4,840,132,770],[4,3,080,90,090],[5,2,530,76,752],[6.,1,320,47,410],[7.,2,200,68,750]]$

Required

a$.$ Use information from the high$-$ and low$-$volume months to develop a cost$-$estimating equation for monthly order$-$processing costs.

$b.$ Plot the data on a scatter diagram. Using the information from representative high$-$ and low$-$volume months, develop a cost$-$estimating equation for monthly order$-$processing costs.

$c.$ What factors might have caused the difference in the equations developed for requirements $($a$)$ and $($b$)?$