Production costs for the large number of previous orders of varying sizes for product are in file production.xls. An analyst evaluates the production cost per unit in each order and averages these to get $50. Using this he gives the cost estimate of $21,000 for new order for 500 units. is this the reasonable cost estimate? Describe why or why not looking at the data in file, can you give the better cost estimate?
| Order size units |
Cost($) |
| 983 |
51275 |
| 798 |
40808 |
| 527 |
38195 |
| 1049 |
49989 |
| 780 |
37299 |
| 831 |
55707 |
| 857 |
13168 |
| 1316 |
58135 |
| 1737 |
76111 |
| 1511 |
65020 |