### Educational Resource: Scatter Diagrams and High-Low Cost Estimation**Context**: From April 1 through October 31, the Coles County Highway Department engages temporary workers to mow and clean the right-of-way along county roads. The County Road Commissioner has requested assistance in determining the variable labor cost of mowing and cleaning one mile of road. The data below reflects current-year operations.#### Data Table| Month | Miles Mowed and Cleaned | Labor 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 |#### Required Analysisa. **Cost-Estimating Equation**: - Use data from the highest and lowest volume months to develop a cost-estimating equation for monthly labor costs.b. **Scatter Diagram and High-Low Method**: - Plot the above data on a scatter diagram. - Use the representative high and low-volume months to develop a cost-estimating equation for monthly labor costs using the high-low method.c. **Factors for Equation Variation**: - Discuss potential factors that could have caused differences between the equations developed in requirements (a) and (b).d. **Adjustment for Wage Increase**: - Modify the equation from requirement (b) to include the impact of an anticipated 5% wage increase. This exercise will enhance understanding of cost estimation through scatter diagrams and the high-low method, focusing on real-world application in highway maintenance operations.

High-low method: In determining cost equation consisting of variable and fixed costs, the highest…

Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Coles County Highway Department hires temporary employ- ees 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 and Cleaned Labor or, Activity Analysis, anu vu.- Costs 240 $6,800 305 7,680 8,310 Month 325 April May. 275 7,200 220 6,550 5,760 4,960 June 200 July. August September October.. 75 Use the information from the high- and low-volume months to develop a equation for monthly labor costs. 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. cost-estimating REQUIRED a. balim oi uode What factors might have caused the difference in the equations developed for requirements () and (b)? - Adjust the equation developed in requirement (b) to incorporate the effect of an anticipalc 5% increase in wages.

Scatter Diagrams and High-Low Cost Estimation From April 1 through October 31, Coles County Highway Department hires temporary employ- ees 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 and Cleaned Labor or, Activity Analysis, anu vu.- Costs 240 $6,800 305 7,680 8,310 Month 325 April May. 275 7,200 220 6,550 5,760 4,960 June 200 July. August September October.. 75 Use the information from the high- and low-volume months to develop a equation for monthly labor costs. 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. cost-estimating REQUIRED a. balim oi uode What factors might have caused the difference in the equations developed for requirements () and (b)? - Adjust the equation developed in requirement (b) to incorporate the effect of an anticipalc 5% increase in wages.

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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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 April May June July August September October Miles Mowed Labor and Cleaned Costs 350 $4,000 300 3,750 400 4,500 250 2,750 375 4,250 200 2,500 100 2,400 Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 1,700 + $ 7 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 $ 0 + $ ox Adjust the equation developed in requirement (b) to…
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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: Miles Mowed Labor Costs 350 $4,000 300 3,750 400 4,500 250 2,750 375 4,250 200 2,500 100 2,400 Month and Cleaned April May June July August September October Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 1700 + $ 7 X Plot the data on 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 Adjust the equation developed in requirement (b) to incorporate the…
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Scatter Diagrams and High-Low Cost EstimationFrom 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 Mowedand Cleaned LaborCosts 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.…