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Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:

	Monthly sales in units
	5,000	8,000	10,000
Cost of food sold	$10,000	$16,000	$20,000
Wages and fringe benefits	5,150	5,240	5,300
Fees paid delivery help	1,150	1,840	2,300
Rent on building	1,400	1,400	1,400
Depreciation on equipment	800	800	800
Utilities	700	760	800
Supplies (soap, floor wax, etc.)	250	340	400
Administrative costs	1,200	1,200	1,200
Total	$20,650	$27,580	$32,200

(a) Identify each cost as being variable, fixed, or mixed.

Cost of food sold	AnswerVariableFixedMixed
Wages and fringe benefits	AnswerVariableFixedMixed
Fees paid delivery help	AnswerVariableFixedMixed
Rent on building	AnswerVariableFixedMixed
Depreciation on equipment	AnswerVariableFixedMixed
Utilities	AnswerVariableFixedMixed
Supplies (soap, floor wax, etc.)	AnswerVariableFixedMixed
Administrative costs	AnswerVariableFixedMixed

(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

	Fixed Costs	Variable Costs
Cost of food sold	Answer	Answer	X
Wages and fringe benefits	Answer	Answer	X
Fees paid delivery help	Answer	Answer	X
Rent on building	Answer	Answer	X
Depreciation on equipment	Answer	Answer	X
Utilities	Answer	Answer	X
Supplies (soap, floor wax, etc.)	Answer	Answer	X
Administrative costs	Answer	Answer	X
Total costs equation	Answer	Answer	X

(c) Predict total costs for a monthly sales volume of 9,400 units. $Answer

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