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 eight months were collected:
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 eight months were collected:
Month
Labor Cost($)
Employee Hours
January
7,556
310
February
10,392
470
March
11,055
500
April
8,181
370
May
9,507
430
June
7,517
340
July
9,932
530
August
8,844
400
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.
$ per employee hour
3. Using the high-low method, construct the cost formula for total labor cost.
Total labor cost = $ + ($ × Employee hours)
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The post 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 eight months were collected: appeared first on Superb Professors.
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