Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 3,400 + $ 114 x 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 = $ 2,506.53 x + $ 15.57 X X Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages. Monthly labor costs = $ 2,506.53 x + $ 16.66 X X

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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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
Month and Cleaned Costs
350 $8,000
300 7,500
April
May
June
July
August
September
October
400 9,000
250 5,500
375 8,500
200 5,000
100 4,800
Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs.
Monthly labor costs = $ 3,400 + $
114 x 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 = $ 2,506.53 x + $
15.57 X X
Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages.
16.66 X X
Monthly labor costs = $ 2,506.53 x + $
Transcribed Image Text: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 Month and Cleaned Costs 350 $8,000 300 7,500 April May June July August September October 400 9,000 250 5,500 375 8,500 200 5,000 100 4,800 Use the information from the high- and low-volume months to develop a cost-estimating equation for monthly labor costs. Monthly labor costs = $ 3,400 + $ 114 x 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 = $ 2,506.53 x + $ 15.57 X X Adjust the equation developed in requirement (b) to incorporate the effect of an anticipated 7 percent increase in wages. 16.66 X X Monthly labor costs = $ 2,506.53 x + $
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