# Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost Pizza Vesuvio makes specialty pizzas. Data for the past eight months were collected:

Using Regression to Calculate Fixed Cost, Calculate the Variable Rate, Construct a Cost Formula, and Determine Budgeted Cost

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

Month

Labor Cost

Employee Hours

January

$7,000

360

February

8,140

550

March

9,899

630

April

9,787

590

May

8,490

480

June

7,450

350

July

9,490

570

August

7,531

310

Coefficients shown by a regression program for Pizza Vesuvio’s data are:

Intercept

4,481

X Variable

8.32

Required:

Use the results of regression to make the following calculations:

1. Calculate the fixed cost of labor.

$

Calculate the variable rate per employee hour.

$per employee hour

2. Construct the cost formula for total labor cost.

Total labor cost = $ + ($ × Employee hours)

3. Calculate the budgeted cost for next month, assuming that 670 employee hours are budgeted. Round answer to the nearest dollar.

$

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