Question
From April 1 thru October 31, Will County Highway Department hires temporary employees to mow and clean the right of way along county roads. The
From April 1 thru October 31, Will County Highway Department hires temporary employees to mow and clean the right of way along county roads. The County Road Commissioner has asked you to help her in determining the variable labor cost of mowing and cleaning a mile of road. The following information is available regarding current year operations:
Month | Miles Mowed and Cleaned | Labor Costs |
April | 350 | $8,000 |
May | 300 | $7,500 |
June | 400 | $9,000 |
July | 250 | $5,500 |
August | 375 | $8,500 |
September | 200 | $5,000 |
October | 100 | $4,800 |
Required:
A - Use the information from the High and Low volume months to develop a cost estimating equation for monthly labor costs.
B - Plot the data on a scatter diagram. Using the information from representative high and low volume months, use the high-low method to develop a cost-estimating equation for monthly labor costs.
C - What factors might have caused the difference in the equations developed for requirements A and B?
D - Adjust the equation developed in requirement B to incorporate the effect of an anticipated 7 percent increase is wages.
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