Using High-Low to Calculate Fixed Cost, Calculate the Variable Rate, and Construct a Cost Function...
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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 8 months were collected: Month Labor Cost($) Employee Hours January 9,790 520 February 7,300 600 March 7,831 640 April 8,440 480 May 10,087 560 June 8,790 440 July 12,920 720 August 7,800 400 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 variable rate. $fill in the blank 1 per employee hour
2. Using the high-low method, calculate the fixed cost of labor. $fill in the blank 2
3. Using the high-low method, construct the cost formula for total labor cost. Total labor cost = $fill in the blank 3 + ($fill in the blank 4 Employee hours)
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