A. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection. B. Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,000 labor hours.

Module 14 Assignment Part I Classify each of the following costs as variable, fixed, mixed, or step by writing an X under one of the following headings (Sales volume is the cost driver). Variable Fixed Mixed Step 1. Total selling and administrative costs 2. Salaries of supervisors (each supervisor is in charge of five employees) 3. Raw materials used in production 4. Power consumption in a restaurant 5. Cost of goods sold in a restaurant 6. Salaries of employees who handle 20 claims per month 7. Pulpwood in a paper mill 8. Salaries of two secretaries in the corporate office 9. Total current manufacturing costs 10. The cost of an automobile rented on the basis of a daily charge plus $0.50 per mile Part II The Specialty Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available: Year 2005 2006 2007 2008 2009 2010 Mugs Produced 2,300 3,200 2,200 4,200 3,000 2,600 Labor-Hours 1,700 1,950 1,600 2,300 1,900 1,750 Labor Cost $10,800 $14,000 $15,100 $20,700 $19,400 $19,800 a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection. b. Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,000 labor hours