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 Cost
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

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

Monthly labor costs = $ ____ + $ ____ X

B. 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

C. Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 5% increase in wages.

Monthly labor costs = $ ____ + $ ____ X

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: Miles Mowed Labor Month and Cleaned 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 = $ 3, 955 + + $ 13.4 v 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 = $ 3, 955 x + $ 13.4 x X Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 5% increase in wages. Monthly labor costs = $ 4,152 x + $ 14.07 x X Check