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Question: Scattergraph, High-Low Method, and Predicting Cost for a Different Time Period from the One Used to Develop a Cost Formula Refer the 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?
The purpose of this assignment is to begin drafting an internal business proposal that outlines how you will implement the solution to the problem.
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