COST ESTIMATION

ASSIGNMENT 1

1. The production manager of Slalama Tobacco company is concerned about the apparent fluctuations in efficiency and work done by employees which are related to the volume. A twelve-week research was undertaken and the following were the outcomes;

Week	Machine hours	Indirect labour cost Sh.
1 2 3 4 5 6 7 8 9 10 11 12	68 88 62 72 60 96 78 46 82 94 68 48	1,190 1,211 1,004 917 770 1,456 1,180 710 1,316 1,032 752 963

Required:

Using the ordinary least square method;

1. Formulate the cost function for the above relationship
2. Compute the indirect labour cost associated with 120 machine hours