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Determine estimated cost of operating purchasing department

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Reference no: EM133088755

Question - The following information pertains to Seven Dwarf Mining Equipment Limited for 2019 and 2020:

 

Cost of Operating the Purchasing Department

Number of Purchase Orders Issued

Fourth quarter of 2019

$130,000

2,500

First quarter of 2020

80,000

1,000

Second quarter of 2020

110,000

1,500

Third quarter of 2020

115,000

2,000

Fourth quarter of 2020

140,000

3,000

Required - Using the high-low method, determine the following:

1. Determine the variable cost per purchase order.

2. Determine the fixed cost of operating the purchasing department for one quarter.

3. Determine the estimated cost of operating the purchasing department in first quarter of 2021 assuming that 2,800 purchase orders will be issued.

Reference no: EM133088755

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