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Using High-Low to Calculate Predicted Total Variable Cost and Total Cost for Budgeted Output
Pizza Vesuvio makes specialty pizzas. Data for the past 8 months were collected:
| | Month | Labor Cost | Employee Hours |
| | January | | $6,800 | | 400 |
| | February | | $9,699 | | 590 |
| | March | | $7,940 | | 670 |
| | April | | $9,587 | | 650 |
| | May | | $8,290 | | 520 |
| | June | | $7,331 | | 390 |
| | July | | $9,290 | | 610 |
| | August | | $7,250 | | 350 |
Assume that this information was used to construct the following formula for monthly labor cost.
| Total Labor Cost = $6494 + ($2.16 x Employee Hours) |
Required:
Assume that 635 employee hours are budgeted for the month of September. Use the total labor cost formula for the following calculations:
1. Calculate total variable labor cost for September. Round your answer to nearest whole number. $fill in the blank 1
2. Calculate total labor cost for September. Round your answer to nearest whole number. $fill in the blank 2
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