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 April May June July August September October Miles Mowed Labor and Cleaned Costs 240 $6,800 305 7,680 325 8.310 275 7.200 220 6,550 200 5.760 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+ S Plot the data on a scatter Monthly labor costs - $ 13.4 X ✔ 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. 8.310 x $ 13.4 x X

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 April May June July August September October Miles Mowed Labor and Cleaned Costs 240 $6,800 305 7,680 325 8.310 275 7.200 220 6,550 200 5.760 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+ S Plot the data on a scatter Monthly labor costs - $ 13.4 X ✔ 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. 8.310 x $ 13.4 x X

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

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 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
April
May
June
July
August
September
October
Miles Mowed Labor
and Cleaned Costs
240 $6,800
305 7,680
325 8.310
275 7,200
220 6,550
200 5,760
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 ✔ 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 - $ 8,310 x S 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 - $
Ox+s
0x x

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Step 1: High-low method:

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Step 2: Use the information from the high- and low-volume months to develop a cost-estimating equation:

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Step 3: Plot the data on a scatter diagram:

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Step 4: Adjust the equation developed in req (b) that effect of an anticipated 5% increase in wages:

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Step 5: Adjust the equation developed in (b) to incorporate the effect of an 5% increase in wages:

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