Time Period from the One Used to Develop a Cost Formula Refer the information for Farnsworth Company above.

Required:
1. Prepare a scattergraph based on the 10 months of data. Does the relationship appear to be linear?
2. Using the high-low method, prepare a cost formula for the receiving activity. Using this 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?

Transcribed Image Text:

Month Roceiving Orders Recaiving Cost 1,000 700 1,500 1,200 1,300 1,100 1,600 1,400 1,700 900 $18,000 15,000 28,000 17,000 25,000 21,000 29,000 24,000 27,000 16,000 10