The production manager of Slalama Tobacco company is concerned about the apparent fluctuations in efficiency and work
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Question:
- The production manager of Slalama Tobacco company is concerned about the apparent fluctuations in efficiency and work done by employees which are related to the volume. A twelve-week research was undertaken and the following were the outcomes;
Week | Machine hours | Indirect labour cost Sh. |
1 2 3 4 5 6 7 8 9 10 11 12 | 68 88 62 72 60 96 78 46 82 94 68 48 | 1,190 1,211 1,004 917 770 1,456 1,180 710 1,316 1,032 752 963 |
Required:
Using the ordinary least square method;
- Formulate the cost function for the above relationship
- Compute the indirect labour cost associated with 120 machine hours
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