The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available: YearMugs ProducedLabor-HoursLabor Cost20121,150850$ 8,40020131,600975$ 9,00020141,100800$ 7,90020152,100 1,150$10,70020161,500950$ 9,70020171,300875$ 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.

1. Select the appropriate independent variable for estimating labor cost. The independent variable…

Answered: The Perry Products Company needs to…

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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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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