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 $14,400

May 300 13,500

June 400 16,200

July 250 9,900

August 375 15,300

September 200 9,000

October 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 Correct

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 = 14,880 + 25.2 X ANSWER INCORRECT

Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages. Monthly labor costs = 4,800 + 26.96 X ANSWER INCORRECT