Models of past cost behavior are called cost functions. Factors that influence costs are called cost drivers (Horngren, Datar, and Rajan, Cost Accounting, 2011). The cost data shown in the next column are from a rug manufacturer. Indirect manufacturing labor costs consist of machine maintenance costs and setup labor costs. Machine-hours and direct manufacturing labor-hours are cost drivers. Your task is to estimate and compare two alternative cost functions for indirect manufacturing labor costs. In the first, machinehours is the independent variable; in the second, direct manufacturing labor-hours is the independent variable. Prepare a report that compares the two cost functions and recommends which should be used to explain and predict indirect manufacturing labor costs. Be sure to justify your choice.

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Indirect Manufacturing Labor Costs Direct Manufacturing Labor-Hours Week Machine-Hours $1,190 1,211 1,004 68 88 62 30 35 36 2 3 4 917 770 72 60 96 78 46 20 47 45 44 38 1,456 1,180 710 8. 1,316 1,032 752 963 82 94 68 48 70 30 29 38 10 11 12