For Heavy Manufacturing Company, labor-hours are 48,000 and wages $156,000 at the high point of the relevant range, and labor-hours are 32,000 and wages $112,000 at the low point of the relevant range.
What is the estimated total labor costs at Heavy Manufacturing Company when 11,400 labor-hours are used?
A) $38,190
B) $55,350
C) $39,900
D) $37,050

Question

Quizplus · Accepted Answer

Slope = ($156,000 - $112,000) / (48,000 - 32,000) = $2.75
Constant (using highest observation): $156,000 - ($2.75 × 48,000) = $24,000
Constant (using lowest observation): $112,000 - ($2.75 × 32,000) = $24,000
Total labor costs, y = $24,000 + ($2.75 × 11,400) = $55,350

For Heavy Manufacturing Company, Labor-Hours Are 48,000 and Wages $156,000