The Zany Toy Company manufactures a variety of toys. The controller is trying to determine what the best allocation base for its utility costs would be, using utility cost data and other information from the past four years. The controller used the CORRELL function to analyze whether number of units produced, sales revenue, machine hours, or labor hours would be the appropriate cost allocation base. The following are the results of the CORRELL function analysis that the controller prepared.

Rank the four variables from the most highly correlated with utility costs to the least correlated. Which variable would you recommend be used as the allocation base for utility costs?

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A 1 Month 2 January 3 February 4 March 5 April 6 May 7 June 8 July 9 August B Year C E D Number Utility Sales of units costs produced revenue 2020 $3,130 2020 $ 4,050 2020 $ 4,116 2020 $ 3,806 2020 $ 3,906 2020 $2,754 2020 $3,609 2020 $4,091 2,175 $ 237,817 2,382 $ 258,013 2,521 $ 261,443 2,809 $ 300,066 2,002 $ 214,460 2,072 $ 222,795 2,192 $ 243,170 2,796 $ 278,415 F G Machine Labor hours hours 3,170 7,811 3,699 9,114 4,102 10,532 3,826 9,655 3,897 10,077 2,797 6,999 3,801 4,103 9,498 6,844 H 1 Correlation: Number of units Correlation: Sales revenue Correlation: Machine hours Correlation: Labor hours Correlation Coefficient 0.82 0.35 0.59 0.96