Question
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
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 April Miles Mowed Labor and Cleaned Costs 350 $12,000 May 300 11,250 June 400 13,500 July 250 8,250 August 375 12,750 September 200 7,500 October 100 7,200 Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 5,100 +$ 21 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 = $ 5,100 x + $ 21 x X Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages. Monthly labor costs $ 5,100 x + $ 22.47 x X 4
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