Scatter Diagrams and High-Low Cost Estimation From April 1 through 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	$16,000
May	300	15,000
June	400	18,000
July	250	11,000
August	375	17,000
September	200	10,000
October	100	9,600

Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs.

Monthly labor costs

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X

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.

Monthly labor costs

=

+

X

Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages.

Monthly labor costs

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X