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 9,490 550 February 7,000 630 March 7,531 670 April 8,140 500 May 9,787 590 June 8,490 460 July 12,872 760 August 7,500 420 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent. Required: 1. Using the high-low method, calculate the fixed cost of labor. $________ 2. Using the high-low method, calculate the variable rate. $_________ 3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost = $ _______ + ($__________ × Employee hours)
Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost($) Employee Hours January 9,490 550 February 7,000 630 March 7,531 670 April 8,140 500 May 9,787 590 June 8,490 460 July 12,872 760 August 7,500 420 Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant. In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent. Required: 1. Using the high-low method, calculate the fixed cost of labor. $________ 2. Using the high-low method, calculate the variable rate. $_________ 3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost = $ _______ + ($__________ × Employee hours)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function
Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:
| Month | Labor Cost($) | Employee Hours | ||||
| January | 9,490 | 550 | ||||
| February | 7,000 | 630 | ||||
| March | 7,531 | 670 | ||||
| April | 8,140 | 500 | ||||
| May | 9,787 | 590 | ||||
| June | 8,490 | 460 | ||||
| July | 12,872 | 760 | ||||
| August | 7,500 | 420 |
Pizza Vesuvio's controller wants to calculate the fixed and variable costs associated with labor used in the restaurant.
In your calculations, round the variable rate per employee hour to the nearest cent. If required, round your final answers to the nearest cent.
Required:
1. Using the high-low method, calculate the fixed cost of labor.
$________
2. Using the high-low method, calculate the variable rate.
$_________
3. Using the high-low method, construct the cost formula for total labor cost.
Total labor cost = $ _______ + ($__________ × Employee hours)
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