Chapter 3, Problem 19BEA

Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for a Time Period That Differs from the Data Period

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 4,000 employee hours are budgeted for the coming year. Use the total labor cost formula to make the following calculations:

1. 1. Calculate total variable labor cost for the year.
2. 2. Calculate total fixed labor cost for the year.
3. 3. Calculate total labor cost for the coming year.

Use the following information for Brief Exercises 3-17 through 3-20:

Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected: