igh-Low Method to Determine Fixed Cost and Variable Rate Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Number of Purchasing Purchase Month January February March April May June July August September October November December Cost $18,860 18.040 19,250 18,050 19,345 19,500 19,670 21.040 19,430 20,020 18,800 19,340 Orders 370 320 370 410 400 450 460 570 440 500 470 480 Required: 1. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month? 2. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be? 3. What is the total fixed purchasing cost? 4. Why doesn't it equal the fixed cost calculated in Requirement 3 above?
igh-Low Method to Determine Fixed Cost and Variable Rate Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders. Number of Purchasing Purchase Month January February March April May June July August September October November December Cost $18,860 18.040 19,250 18,050 19,345 19,500 19,670 21.040 19,430 20,020 18,800 19,340 Orders 370 320 370 410 400 450 460 570 440 500 470 480 Required: 1. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month? 2. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be? 3. What is the total fixed purchasing cost? 4. Why doesn't it equal the fixed cost calculated in Requirement 3 above?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 22BEA: Inventory Valuation under Variable Costing Refer to the data for Judson Company above. Required: 1....
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Question
High-Low Method to Determine Fixed Cost and Variable Rate
Dohini Manufacturing Company had the following 12 months of data on purchasing cost and number of purchase orders.
Number of
Purchasing
Purchase
Month
January
February
March
April
May
June
July
August
September
October
November
December
Cost
$18,860
18.040
19,250
18,050
19,345
19,500
19,670
21.040
19,430
20,020
18,800
19,340
Orders
370
320
370
410
400
450
460
570
440
500
470
480
Required:
1. If Dohini Manufacturing Company estimates that next month will have 420 purchase orders, what is the total estimated purchasing cost for that month?
2. What if Dohini Manufacturing wants to estimate purchasing cost for the coming year and expects 5,330 purchase orders? What will estimated total purchasing cost be?
3. What is the total fixed purchasing cost?
4. Why doesn't it equal the fixed cost calculated in Requirement 3 above?
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