Month Miles Mowed and Cleaned Labor Costs April 350 $16,000 May 300 15,000 June 400 18,000 July 250 11,000 August 375 17,000 September 200 10,000 October 100 9,600 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 + Answer 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 = Answer + Answer X
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 | $16,000 |
| May | 300 | 15,000 |
| June | 400 | 18,000 |
| July | 250 | 11,000 |
| August | 375 | 17,000 |
| September | 200 | 10,000 |
| October | 100 | 9,600 |
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 | + | Answer | 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 | = | Answer | + | Answer | 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 | + | Answer | X |
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