Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January $6,800 390 February $9,699 580 March $7,940 670 April $9,587 640 May $8,290 510 June $7,331 380 July $9,290 600 August $7,250 340 Assume that this information was used to construct the following formula for monthly labor cost. Total Labor Cost = $6539 + ($2.09 x Employee Hours) Required: Assume that 705 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations: 1. Calculate total variable labor cost for September. Round your answer to nearest whole number. 2. Calculate total labor cost for September. Round your answer to nearest whole number.

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: Month Labor Cost Employee Hours January $6,800 390 February $9,699 580 March $7,940 670 April $9,587 640 May $8,290 510 June $7,331 380 July $9,290 600 August $7,250 340 Assume that this information was used to construct the following formula for monthly labor cost. Total Labor Cost = $6539 + ($2.09 x Employee Hours) Required: Assume that 705 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations: 1. Calculate total variable labor cost for September. Round your answer to nearest whole number. 2. Calculate total labor cost for September. Round your answer to nearest whole number.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 18BEA: Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output Refer...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output
Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:
Month
Labor Cost Employee Hours
January
$6,800
390
February
$9,699
580
March
$7,940
670
April
$9,587
640
May
$8,290
510
June
$7,331
380
July
$9,290
600
August
$7,250
340
Assume that this information was used to construct the following formula for monthly labor cost.
Total Labor Cost = $6539 + ($2.09 x Employee Hours)
Required:
Assume that 705 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:
1. Calculate total variable labor cost for September. Round your answer to nearest whole number.
2. Calculate total labor cost for September. Round your answer to nearest whole number.

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