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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 $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

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

Monthly labor costs = Answer

Correct

Mark 1.00 out of 1.00

5100 +

Correct

Mark 1.00 out of 1.00

21 *

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 = Answer

Incorrect

Mark 0.00 out of 1.00

+ Answer

Incorrect

Mark 0.00 out of 1.00

X

d. Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages.

Monthly labor costs = Answer

Incorrect

Mark 0.00 out of 1.00

+ Answer

Incorrect

Mark 0.00 out of 1.00

X