Chapter 21, Problem 3BTN

To determine

Concept Introduction:

Direct Labor analysis:

Direct labor analysis is the study of the cost behaviour. It explains how the cost changes with the change in the level of output or level or work.

Direct labor analysis is basically dealt with the cost behaviour of the cost of labor for a particular kind of work. There are different ways or methods to estimate cost based on data available from the past results. The tools that are available to estimate cost are – scatter diagram, high low method and the least square method.

To prepare:

A one-page memorandum for the mechanics and owners that describes the direct labor analysis that will be undertaken in completing the survey