The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The companys cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base that correlates with the cost. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Quarter	Tons Mined	Direct Labor-Hours			Utilities Cost
Year 1:
First	34,000		6,900		$	69,000
Second	21,000		4,900		$	64,000
Third	39,000		5,900		$	79,000
Fourth	31,000		7,900		$	94,000
Year 2:
First	37,000		13,800		$	119,000
Second	44,000		14,700		$	124,000
Third	49,000		11,800		$	104,000
Fourth	47,000		14,800		$	139,000

Garrison 17e Required:

1-a. Using tons mined as the independent variable, prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis.

Instructions: 1. On the graph below, use the point tool (Year 1-1st quarter) to plot tons mined on the horizontal axis and utilities cost on the Vertical axis. 2. Repeat the same process for the plotter tools (Year 1-2nd quarter to Year 2-4th quarter). 3. To enter exact coordinates, click on the point and enter the values of x and y. 4. To remove a point from the graph, click on the point and select delete option.

1-b. Using the least-squares regression method, estimate the variable utilities cost per ton mined and the total fixed utilities cost per quarter. Express these estimates in the form Y = a + bX. (Round the Variable cost per unit to 2 decimal places and Fixed Cost to the nearest whole dollar amount.)

2-a. Using direct labor-hours as the independent variable, prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis.

Instructions: 1. On the graph below, use the point tool (Year 1-1st quarter) to plot direct labor-hours on the horizontal axis and utilities cost on the Vertical axis. 2. Repeat the same process for the plotter tools (Year 1-2nd quarter to Year 2-4th quarter). 3. To enter exact coordinates, click on the point and enter the values of x and y. 4. To remove a point from the graph, click on the point and select delete option.

2-b. Using the least-squares regression method, estimate the variable utilities cost per direct labor-hour and the total fixed utilities cost per quarter. Express these estimates in the form Y = a + bX. (Round the Variable cost to 2 decimal places and Fixed Cost to the nearest whole dollar amount.)

3. Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?