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Exercise 5A-4 High-Low Method; Scattergraph Analysis [LO5-10]

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Archer Company is a wholesaler of custom-built air-conditioning units for commercial buildings. It gathered the following monthly data relating to units shipped and total shipping expense:

Month	Units Shipped	Total Shipping Expense
January	2	$	2,600
February	5	$	3,100
March	3	$	2,500
April	4	$	2,800
May	6	$	3,100
June	7	$	4,700
July	1	$	2,000

Exercise 5A-4 Part 1

Required:

1-a. Prepare a scattergraph using the data given above. Plot cost on the vertical axis and activity on the horizontal axis.

1-b. Is there an approximately linear relationship between shipping expense and the number of units shipped?

Yes or No

2. Using the high-low method, estimate the cost formula for shipping expense.

4. What factors, other than the number of units shipped, are likely to affect the companys shipping expense?

[ ] Weight of the units shippedunanswered

[ ] Distance traveledunanswered

[ ] Sales commissionsunanswered

[ ] Trade discounts given to repeat customersunanswered

[ ] Express shipping to meet a deadline

Take a picture and upload graph. If unable to do so, answer as much of the question as possible. Thank you.