V/TUsing High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost FunctionPizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:MonthLabor Cost Employee HoursJanuaryFebruaryMarch$7,0008,1409,8999,7878,4907,450totFeedback360550AprilMayJuneJuly9,490August7,531310Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in threstaurant.►Check My Work630610480350In your calculations, round the variable rate per employee hour to the nearest cent.Required:1. Using the high-low method, calculate the fixed cost of labor.5702. Using the high-low method, calculate the variable rate.per employee hour3. Using the high-low method, construct the cost formula for total labor cost.Total labor cost = $+ [$x Employee hours]DreviouMa

Answered: Pizza Vesuvio makes specialty pizzas.…

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January February March April $7,000 8,140 9,899 9,787 360 550 630 610

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

V/T
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function
Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:
Month
Labor Cost Employee Hours
January
February
March
$7,000
8,140
9,899
9,787
8,490
7,450
tot
Feedback
360
550
April
May
June
July
9,490
August
7,531
310
Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in th
restaurant.
►Check My Work
630
610
480
350
In your calculations, round the variable rate per employee hour to the nearest cent.
Required:
1. Using the high-low method, calculate the fixed cost of labor.
570
2. Using the high-low method, calculate the variable rate.
per employee hour
3. Using the high-low method, construct the cost formula for total labor cost.
Total labor cost = $
+ [$
x Employee hours]
Dreviou
Ma

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Step 2: (1) Calculate the fixed cost of labor:

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Step 3: (2) Calculate the variable rate per employee hour:

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Step 4: (3) Construct the cost formula for total labor cost:

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