Pane of Glass Inc. produces custom glasswork for high-end homes and buildings. The following cost data relate
Question:
Pane of Glass Inc. produces custom glasswork for high-end homes and buildings. The following cost data relate to the company’s labour costs.
Units Produced | Labour Cost | |
July | 400 | $15,000 |
August | 300 | 13,000 |
September | 320 | 13,200 |
October | 350 | 13,800 |
November | 420 | 16,000 |
December | 410 | 14,800 |
Required:
a. Using the high-low method, estimate the cost formula (write it in y = mx + b format).
1. Using your answer from part a.) above, assuming in the following month the company expects to make 250 units, what will be the company’s estimated labour cost.
b. Using the scattergraph method, estimate the cost formula.
c. Using the least squares regression method, estimate the cost formula.
d. Are there any factors other than the number of units produced that may contribute to a variation in labour cost?
Managerial Accounting for Managers
ISBN: 978-0073527130
2nd edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison