1. Total selling and administrative costs
2. Salaries of supervisors (each supervisor is in charge of five employees)
3. Raw materials used in production
4. Power consumption in a restaurant
5. Cost of goods sold in a restaurant
6. Salaries of employees who handle 20 claims
per month
7. Pulpwood in a paper mill
8. Salaries of two secretaries in the corporate
office
9. Total current manufacturing costs
10. The cost of an automobile rented on the
basis of a daily charge plus $0.50 per mile
Part II
The Specialty Products Company needs to predict the labor cost in producing made-to-order mugs. The following production information is available:
Year
2005
2006
2007
2008
2009
2010
Mugs Produced
2,300
3,200
2,200
4,200
3,000
2,600
Labor-Hours
1,700
1,950
1,600
2,300
1,900
1,750
Labor Cost
$10,800
$14,000
$15,100
$20,700
$19,400
$19,800
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 2,000 labor hours.