Scattergraph, HighLow Method, and Predicting Cost for a Different Time Period from the One Used to Develop a Cost Formula

Farnsworth Company has gathered data on its overhead activities and associated costs for the past 10 months. Tracy Heppler, a member of the controller's department, has convinced management that overhead costs can be better estimated and controlled if the fixed and variable components of each overhead activity are known. One such activity is receiving raw materials (unloading incoming goods, counting goods, and inspecting goods), which she believes is driven by the number of receiving orders. Ten months of data have been gathered for the receiving activity and are as follows:

Month	Receiving Orders	Receiving Cost ($)
1	1,000	27,000
2	700	22,500
3	1,500	42,000
4	1,200	25,500
5	1,300	37,500
6	1,100	31,500
7	1,600	43,500
8	1,400	36,000
9	1,700	40,500
10	900	24,000

Required:

2. Using the highlow method, select a cost formula for the receiving activity. Receiving cost = $

Using the cost formula, what is the predicted cost of receiving for a month in which 1,450 receiving orders are processed? $

3. Prepare a cost formula for the receiving activity for a quarter. Based on this formula, what is the predicted cost of receiving for a quarter in which 4,650 receiving orders are anticipated? $

Prepare a cost formula for the receiving activity for a year. Based on this formula, what is the predicted cost of receiving for a year in which 18,000 receiving orders are anticipated? $