Chapter 3, Problem 18BEA

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output

Refer to the information for Pizza Vesuvio on the previous page. Assume that this information was used to construct the following formula for monthly labor cost.

$\text{Total Labor Cost = }\$5,237+(\$7.40\times \text{Employee Hours)}$

Required:

Assume that 675 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:

1. 1. Calculate total variable labor cost for September.
2. 2. Calculate total labor cost for September.