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: Miles Mowed Month and Cleaned April May June July August September October Labor Costs 350 $14,400 300 13,500 400 16,200 250 9,900 375 15,300 200 9,000 100 8,640 Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 6,120 + $ 25.2 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 = $ $ 1,326.3 x + $ 37.516 x X Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages. Monthly labor costs = $ 1419.14 x + $ 40,14 Check

Scatter Diagrams and High-Low Cost Estimation