Question
Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Coles County Highway Department hires temporary employees to mow and clean the right-of-way
Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Coles 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 | 240 | $6,800 |
| May | 305 | 7,680 |
| June | 325 | 8,310 |
| July | 275 | 7,200 |
| August | 220 | 6,550 |
| September | 200 | 5,760 |
| October | 75 | 4,960 |
Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs.
| Monthly labor costs | = | Answer
| + | Answer
| 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 | = | Answer
| + | Answer
| X |
Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 5% increase in wages.
| Monthly labor costs | = | Answer
| + | Answer
| X |
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Intermediate Accounting
Authors: kieso, weygandt and warfield.
IFRS Edition
978-1118443965, 1118800532, 9781118800539, 978-0470873991
