The controller for McGarvey Manufacturing Company felt that the number of purchase orders alone did not explain the monthly purchasing cost. He knew that nonstandard orders (forexample, one requiring an overseas supplier) took more time and effort. He collected data on the number of nonstandard orders for the past 12 months and added that information to thedata on purchasing cost and total number of purchase orders.MonthJanuaryFebruaryMarchMayJulyAugustSeptemberOctoberNovemberDecemberPurchasingCostInterceptX variable 1X variable 2Required:$19,25018,05018,20018,05019,34519,50019,67020,94019,43020,02018,80019,340Number ofPurchaseOrders370330320410400450460560440600470480Number ofNonstandardOrders6140357355308051751227Multiple regression was run on the above data; the coefficients shown by the regression program are:14,530 (rounded to the nearest dollar)6.30 (rounded to the nearest cent)16.8 (rounded to the nearest cent)1. Construct the cost formula for the purchasing activity showing the fixed cost and the variable rate.8.03 X +($ 8.03 X x Purchase orders) +2. If McGarvey Manufacturing Company estimates that next month will have 490 total purchase orders and 42 nonstandard orders, what is the total estimated purchasing cost for thatmonth? (Round your answer to the nearest dollar.)8.03 Xx Nonstandard orders)3. What if McGarvey Manufacturing mants to estimate purchasing cost for the coming year and expects 6,000 purchase orders and 590 nonstandard orders?What will estimated total purchasing cost be? (Round your answer to the nearest dollar.)23,507 XWhat is the total fixed purchasing cost?

MonthPurchase costNumber of purchase ordersNumber of nonstandard…

Answered: 1. Construct the cost formula for the…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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