The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available: Year Mugs Produced Labor-Hours Labor Cost 2012 1,150 850 $ 8,400 2013 1,600 975 $ 9,000 2014 1,100 800 $ 7,900 2015 2,100 1,150 $10,700 2016 1,500 950 $ 9,700 2017 1,300 875 $ 9,900 Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection. Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,500 labor hours.
The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available: Year Mugs Produced Labor-Hours Labor Cost 2012 1,150 850 $ 8,400 2013 1,600 975 $ 9,000 2014 1,100 800 $ 7,900 2015 2,100 1,150 $10,700 2016 1,500 950 $ 9,700 2017 1,300 875 $ 9,900 Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection. Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,500 labor hours.
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5EA: Rose Company has a relevant range of production between 10,000 and 25.000 units. The following cost...
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- The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available:
|
Year |
Mugs Produced |
Labor-Hours |
Labor Cost |
|
2012 |
1,150 |
850 |
$ 8,400 |
|
2013 |
1,600 |
975 |
$ 9,000 |
|
2014 |
1,100 |
800 |
$ 7,900 |
|
2015 |
2,100 |
1,150 |
$10,700 |
|
2016 |
1,500 |
950 |
$ 9,700 |
|
2017 |
1,300 |
875 |
$ 9,900 |
- Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection.
- Develop an equation for labor costs using the high-low method of cost estimation, and predict total costs for an annual usage of 2,500 labor hours.
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