The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available:
a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection.
b. 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.

Question

The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available:
  a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection.
b. 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.

Quizplus · Accepted Answer

The Answer of The Perry Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available:
  a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your selection.
b. 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.

The Perry Products Company Needs to Predict the Labor Cost