The Knapp Company Needs to Predict the Labour Cost in Producing

question 109

Essay

The Knapp Company needs to predict the labour cost in producing small Carrot Patch Dolls.The following production information is available:
$$\begin{array} { | c | c | c | c | } \hline \text { Year } & \text { Dolls Praduced } & \text { Labour Hours } & \text { Labour Dallars } \\\hline 2005 & 1,150 & 850 & \$ 1 7 , 0 0 0 \\\hline 2006 & 1,600 & 975 & 23,400 \\\hline 2007 & 1,100 & 800 & 25,600 \\\hline 2008 & 2,100 & 1,150 & 36,800 \\\hline 2009 & 1,500 & 950 & 34,200 \\\hline 2010 & 1,300 & 875 & 35,000 \\\hline\end{array}$$ Wage rates have steadily increased since 2005; however,management expects no further increases in 2011.
a.Select the appropriate independent variable for predicting labour cost.Explain the reason for your selection.
b.Develop an equation to predict for 2011 the labour cost of producing Carrot Patch Dolls.Use the high-low method.