The Knapp Company needs to predict the labor cost in producing small ceramic dolls. The following production information is available:
Wage rates have steadily increased since 2011; however, management expects no further increases in 2017.
Required:
a. Select the appropriate independent variable for predicting labor cost. Explain the reason for your selection.
b. Develop an equation to predict for 2017 the labor cost of producing ceramic dolls. Use the high- low method.

Question

The Knapp Company needs to predict the labor cost in producing small ceramic dolls. The following production information is available:
  Wage rates have steadily increased since 2011; however, management expects no further increases in 2017.
Required: 
a. Select the appropriate independent variable for predicting labor cost. Explain the reason for your selection.
b. Develop an equation to predict for 2017 the labor cost of producing ceramic dolls. Use the high- low method.

Quizplus · Accepted Answer

The Answer of The Knapp Company needs to predict the labor cost in producing small ceramic dolls. The following production information is available:
  Wage rates have steadily increased since 2011; however, management expects no further increases in 2017.
Required: 
a. Select the appropriate independent variable for predicting labor cost. Explain the reason for your selection.
b. Develop an equation to predict for 2017 the labor cost of producing ceramic dolls. Use the high- low method.

The Knapp Company Needs to Predict the Labor Cost in Producing