Water Pursuits operates a chain of 10 retail surf and water sport apparel stores in Western Australia. Each store makes its own purchasing decisions. Vijay Krishnan, Chief Operating Officer of Water Pursuits, is interested in better understanding the drivers of the Purchasing Departments costs. For many years, the Purchasing Departments' costs have been allocated to products on the basis of the dollar value of merchandise purchased. Vijay recently attended a training seminar conducted by Retail Traders Association of WA and CPA Australia, titled "Cost Drivers in the Retail Industry". In a presentation at the seminar, Top Hat Clothiers, a high fashion retailer that has implemented activity-based costing, reported number of purchase orders and number of suppliers to be the two most important cost drivers of Purchasing Department costs. The dollar value of merchandise purchased in each purchase order was not found to be a significant cost driver. Enthralled, Vijay interviewed several members of the Purchasing Department at the Water Pursuits store in Fremantle. They believed that Top Hať's conclusions also applied to their Purchasing Department. Vijay collected the following data for the most recent year for Water Pursuits' 10 retail stores: Purchasing Department Costs Dollar Value of Number of Number Department Store merchandise purchase orders of purchased 2$ suppliers $ 1,523,000 $ 1,100,000 $ 298,315,000 2$ 4,457 4,550 2,333 5,944 4,196 2,127 5,286 Albany Margaret River Mandurah 132 122 173,456,000 $ 2$ 547,000 $ 2,049,000 $ 1,056,000 $ 81,160,000 68 Fremantle 219,566,000 2$ 255 Esperance 163,505,000 2$ 113 Broome 529,000 $ 1,538,000 $ 1,754,000 $ 1,612,000 $ 1,257,000 129,854,000 2$ 65 Mindarie 352,875,000 2$ 104 Jurien Bay 238,674,000 2$ 4,081 4,707 4,331 195 Geraldton 239,312,000 2$ 144 Exmouth 180,944,000 133 REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (i) Number of Suppliers. а. b. From your results above, determine which is the most appropriate cost driver and explain your answer by referencing the appropriate statistical outputs.

Water Pursuits operates a chain of 10 retail surf and water sport apparel stores in Western Australia. Each store makes its own purchasing decisions. Vijay Krishnan, Chief Operating Officer of Water Pursuits, is interested in better understanding the drivers of the Purchasing Departments costs. For many years, the Purchasing Departments' costs have been allocated to products on the basis of the dollar value of merchandise purchased. Vijay recently attended a training seminar conducted by Retail Traders Association of WA and CPA Australia, titled "Cost Drivers in the Retail Industry". In a presentation at the seminar, Top Hat Clothiers, a high fashion retailer that has implemented activity-based costing, reported number of purchase orders and number of suppliers to be the two most important cost drivers of Purchasing Department costs. The dollar value of merchandise purchased in each purchase order was not found to be a significant cost driver. Enthralled, Vijay interviewed several members of the Purchasing Department at the Water Pursuits store in Fremantle. They believed that Top Hať's conclusions also applied to their Purchasing Department. Vijay collected the following data for the most recent year for Water Pursuits' 10 retail stores: Purchasing Department Costs Dollar Value of Number of Number Department Store merchandise purchase orders of purchased 2$ suppliers $ 1,523,000 $ 1,100,000 $ 298,315,000 2$ 4,457 4,550 2,333 5,944 4,196 2,127 5,286 Albany Margaret River Mandurah 132 122 173,456,000 $ 2$ 547,000 $ 2,049,000 $ 1,056,000 $ 81,160,000 68 Fremantle 219,566,000 2$ 255 Esperance 163,505,000 2$ 113 Broome 529,000 $ 1,538,000 $ 1,754,000 $ 1,612,000 $ 1,257,000 129,854,000 2$ 65 Mindarie 352,875,000 2$ 104 Jurien Bay 238,674,000 2$ 4,081 4,707 4,331 195 Geraldton 239,312,000 2$ 144 Exmouth 180,944,000 133 REQUIRED: Using EXCEL, estimate the simple regression equation for (i) Dollar Value of Merchandise Purchased, (ii) Number of Purchase Orders and (i) Number of Suppliers. а. b. From your results above, determine which is the most appropriate cost driver and explain your answer by referencing the appropriate statistical outputs.