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Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information...

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Accounting

Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs.

Month Sales Orders Order-Processing Costs
1 3,000 $ 49,620
2 1,500 30,225
3 4,400 72,420
4 2,800 49,140
5 2,300 41,865
6 1,200 25,860
7 2,000 37,500

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 production costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram:

Month Sales Orders Order-Processing Costs
1 3,000 $ 82,700
2 1,500 50,375
3 4,400 120,700
4 2,800 81,900
5 2,300 69,775
6 1,200 43,100
7 2,000 62,500

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