PAC 8.2 Managerial Accounting: Interpret Diagnostic Analytics Data Managerial Accounting You have been tasked with understanding the relationship between sales orders and purchase orders to acquire raw materials. Currently, production sites are individually responsible for all purchases. The benefit of this decentralized organization is that the sites can quickly respond to changes in production demand. The downside is that sourcing for purchases is not coordinated between the sites. There is a concern that some sites purchasing departments have been buying more raw materials than needed. Your manager has asked you to analyze purchases compared to sales. You prepared the following analyses. A line graph is titled, Ortho Incorporated Sales Orders versus Purchase Orders. The vertical axis ranges from $20,000,000 to $100,000,000, in increments of $20,000,000. The horizontal axis ranges from 2022 to 2025, in intervals of 1 year. Each year is divided into four months: January, April, July, and October. The key notes below read: Purchase Orders, and Sales Orders. A trend line representing, Purchase Orders, starts at (January, 2021, $30,000,000), passes through certain markings on the horizontal axis with several sharp crests and troughs and ends at (October, 2025, $40,000,000). A trend line representing, Sales Orders, starts at (January, 2021, $59,000,000), passes through certain markings on the horizontal axis with several sharp crests and troughs and ends at (October, 2025, $76,000,000). All values are approximate. Ortho Inc. Correlation between Purchases and Sales Purchase Orders Sales Orders Purchase Orders 1 Sales Orders 0.750363942 1 How do these analyses help evaluate if the sites are purchasing more raw materials than they need? List some additional analyses that would be useful. Create additional analyses and interpret your results